Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

ALLIED IRISH BANKS BILL

Order for Second Reading read.

To be read a Second time on Thursday 4 February.

Oral Answers to Questions — EDUCATION

English

Mr. Bradley: To ask the Secretary of State for Education what representations he has received on the implementation of key stage 3 of the national curriculum in English.

Mrs. Anne Campbell: To ask the Secretary of State for Education if he will undertake a pilot project in the 1993–94 academic year to test further the most appropriate way of delivering key stage 3 English in the national curriculum.

Mr. Milligan: To ask the Secretary of State for Education if he will make a statement on progress in introducing English tests in secondary schools.

The Secretary of State for Education (Mr. John Patten): Tests provide vital information about children's progress. This is nowhere more important than in English, which is the bedrock of the curriculum.
The preparation of the 1993 English tests by the School Examinations and Assessment Council has been scrupulous. The tests have been tried out in hundreds of schools over the past two and half years. SEAC itself has responded to teachers' concerns by providing all the information that teachers need about the tests in January—a good five months before they are taken.
The tests will go ahead as planned; anything less would be to let down pupils who have been following the national curriculum in English for the past three years.

Mr. Bradley: The Secretary of State clearly does not realise the anger and despair that he is causing in local schools by pressing ahead with key stage 3. Will he not today announce the postponement of the tests for at least one year and pick up the phone and talk to some of the teachers in my constituency at local schools such as Oakwood and Parrswood about the total lack of preparation time that they have been given? There has also been a complete lack of consultation on the adequacy of the tests, which are inadequate in relationship to the

national curriculum. The Secretary of State should today call for a postponement, not for his sake or for my sake, but for the sake of our children's education.

Mr. Patten: Over the past two and a half years the tests have been piloted in more than 500 schools, involving more than 45,000 children. There are two separate issues. First, the tests are new, and all new tests cause problems with people who have not conducted them before; there are alleged teething problems, and I respect the views of teachers, including secondary school heads, who are always interested in getting the tests right.
Secondly, there is a totally separate agenda characterised by the National Union of Teachers which, in its "Anti-SATs News", states that it wishes to undermine the whole of the Government's testing regime. It states:
The boycott of the Key Stage 3 English tests is the first step on this road.

Mrs. Campbell: Given the Secretary of State's well-known reluctance to listen to anyone with misgivings about the direction of his education policy, may I ask to whom he listened when he decided to change the national curriculum for English well before the time it was due for review and against the recommendations of the report of Warwick university?

Mr. Patten: The National Curriculum Council—professional advisers to the Secretary of State in England—felt that the English curriculum needed a review and that there should be much more concentration on the basics in the English curriculum. It is important that we do all that we can to ensure that the English national curriculum and the testing regime run as smoothly as possible. There are more than 4 million adult illiterates in this country, and the number has been rising since the 1960s—hence the critical importance of the testing: we need a benchmark against which to judge children's improved performance.

Mr. Milligan: I welcome what my right hon. Friend has just said. Is it not vital to introduce proper testing to reduce the number of illiterates in Britain, which is one of the most serious problems that we face? Will he recognise, however, that some head teachers in my constituency who support the principle of testing are concerned at the relatively rapid speed with which the English tests have been introduced? Is there not a case for a dry run this year, as was done with the maths and science tests last year?

Mr. Patten: Those are the kind of arguments that were put forward by head teachers, a great number of whom I have met in recent months to discuss those and other issues. In the run-up to the first ever proper tests in English for children aged seven in 1991 there were the same kind of fears and inhibitions, but the tests went ahead. They have given us a benchmark and have shown that, while between 1991 and 1992 the performance of children in English improved, lamentably, about one quarter of our children are still not performing adequately in English. We must begin to ensure that all our children get a fair deal, and testing is critical in that process.

Mr. Madel: Will my right hon. Friend consider sympathetically representations made to him by schools that have suddenly had to buy additional books for key stage 3 for which they had not budgeted?

Mr. Patten: I know the particular problems in Bedfordshire. My hon. Friend has been an assiduous


promoter of the interests of schools in his county and his constituency. This year, there has been about £15 million additional support for books. Every time there is a new syllabus—it is the same with GCSE and A-level—there can be additional demands. That is why I urge all local authorities to delegate as much of their budget as possible to schools, because less money spent on bureaucrats equals more money spent on books.

Mrs. Ann Taylor: Will the Secretary of State correct his statement a few minutes ago that the tests have been piloted in hundreds of schools? Is it not a fact that the University of Cambridge local examinations syndicate obtained the contract for the tests last summer and that the tests have been piloted in only 32 schools involving pupils of the wrong age—15-year-olds and not 14-year-olds? Will the right hon. Gentleman acknowledge the point made by the hon. Member for Bedfordshire, South-West (Mr. Madel) and realise that it is not just in Bedfordshire that schools face financial problems as a result of the imposition of the tests? What does he intend to do about the fact that some of the books on the recommended list are out of print? Will he acknowledge that he cannot say that he respects teachers, parents and governors and then always refuse to listen to them?

Mr. Patten: No, and if the hon. Lady goes on like that some of my right hon. and hon. Friends will be putting in claims for damages for passive boring. The key stage 3 English tests have been prepared with more care and over a longer period than any other public examination.

Mr. Patrick Thompson: Will my right hon. Friend join me in supporting those teachers and their organisations who have set aside the idea of a boycott because they feel that that is not the right way forward? Does he agree that a boycott goes against the whole idea of teachers' professional standards and is not the right way to conduct a debate on this or any other issue?

Mr. Patten: Any boycott would do great damage to the teaching profession. Head teachers, whom I met as recently as last Friday in a group to discuss just this issue, all said that they did not wish to see any boycotting of the tests. However, I happen to know from the evidence that I put before the House a moment or two ago that the NUT now wishes to go completely against testing. I happen to think that that is becoming Labour party policy as well.

Grant-maintained Schools

Mr. Madden: To ask the Secretary of State for Education what representations he has received concerning the procedures associated with ballots for deciding whether schools become grant maintained.

Mr. Patten: My Department receives a number of letters, telephone calls and other representations concerning the procedures associated with ballots for deciding whether schools become grant maintained. Since the Education Reform Act 1988 came into force, we have received many useful suggestions about ways in which the grant-maintained ballot process could be improved. The Education Bill now before the House contains measures to smooth the process and to assist governors in putting their case to parents.

Mr. Madden: Is the Secretary of State aware that despite the political vendetta that he has waged against Bradford local education authority—[Interruption.] Does the right hon. Gentleman agree that opting out by schools in Bradford has been a complete and utter flop? Does he also accept that, however much he attempts further to rig balloting and other procedures, most sensible parents, when the full facts are placed before them, will reject the prospect of placing the fate and funding of local education authority schools in the hands of the Secretary of State or any of his successors?

Mr. Patten: I agree with the hon. Gentleman that it is extremely important that parents, governors and the local community should have the full facts put before them in the most unemotional and non-political form possible. When information is presented in that way and parents have the chance to vote, we see the result in schools in Bradford such as Oakbank, which I can announce today has just become grant maintained. In Blackburn yesterday, a school voted to become grant maintained with a 70 per cent. turnout of parents and a massive majority in favour of grant-maintained status. Well-informed parents with the information before them should be left to make up their own minds and not be subjected to political bullying and harassment.

Dr. Spink: In view of the ever-increasing number of parents who are voting for their children's schools to become grant maintained and, therefore, to take control of those schools with true local accountability, what does my right hon. Friend think of the remark by the hon. Member for Dewsbury (Mrs. Taylor), the Labour Front-Bench education spokesman, that it is Labour's intention—

Madam Speaker: Order. [Interruption.] Order. The hon. Gentleman's remarks are completely out of order —and he paid no attention to me when I told him so. I call upon the Secretary of State to give a limited reply, provided that it does not relate to that part of the hon. Gentleman's question that was out of order.

Mr. Patten: That will be quite difficult, Madam Speaker. However, I hold my hon. Friend—the pride of Essex—in great esteem for the way in which he attempted to put on the record the fact that the hon. Member for Dewsbury (Mrs. Taylor) has come out on grant-maintained schools—[HON. MEMBERS: "Order".] This is on grant-maintained schools solo—honest John Patten —honestly, Madam Speaker. Following the question of the hon. Member for Bradford, West (Mr. Madden), the hon. Lady said that it is now Labour party policy to return all grant-maintained schools to local authority control.

Special Needs

Ms. Walley: To ask the Secretary of State for Education what assessment he has made of the adequacy of funds available for special needs education.

The Parliamentary Under-Secretary of State for Schools (Mr. Eric Forth): It is for local education authorities and schools with delegated management to decide on the level of funds to devote to special education. Well-run local authorities and schools should be able to fulfil their duties in respect of pupils with special educational needs.

Ms. Walley: Although the Minister's answer sounds all well and good, does he not realise that the competitive direction in which he is leading local schools is causing anxiety to the parents of children requiring special needs education? Is he aware that in Staffordshire there has been an 18 per cent. increase in requests for formal assessment and that the average increase is the same throughout the country? Is it not the case that, as a result of the Government's so-called education reform, the budgets of local schools are so stretched and stressed that they cannot deal properly with special needs education?

Mr. Forth: I do not accept that. There is ample evidence that special educational needs are being well met by schools up and down the country, and by most local education authorities. Because the hon. Lady's authority, Staffordshire, started off with a somewhat lower percentage of statemented children, it has scope to catch up and there is evidence that it is doing just that. Although there is some evidence that more parents are asking for statements, there is also evidence of an increase in the amount of statementing done by that local education authority.
There has been a widespread welcome for the huge step that we are taking in the Education Bill now in Committee. We are introducing many radical new provisions for children with special educational needs and they have been welcomed throughout the community involved.

Mr. Rowe: Does my hon. Friend accept that it is not just a question of money? The provision of specialist help is also vital. Can my hon. Friend assure me that his Department is discussing the matter seriously both with health authorities and with social service departments, which are also purchasers of services such as speech therapy and psychology, so that the partnership between the three publicly funded bodies can be maximised?

Mr. Forth: Indeed. My hon. Friend has raised an important point. We are constantly aware of the need to ensure, wherever possible, that all authorities involved in and concerned with the meeting of special educational needs—for instance, education authorities, health authorities and social service departments—work co-operatively to ensure that they all discharge their various responsibilities together in making the best possible provision. I am grateful to my hon. Friend for raising the matter.

Mr. Win Griffiths: Does the Minister realise that, although organisations dealing with special educational needs welcome a number of aspects of the Education Bill, they are nevertheless very fearful about funding levels? They have already presented evidence of a drop in provision of learning support services. With 120 cases involving statements going to judicial review, this is but the tip of the iceberg. The Minister's Department must take seriously the evidence of underfunding and lack of services for children with special educational needs, whether or not they have statements.

Mr. Forth: I do not think that that is right, although I accept part of what the hon. Gentleman has said—that the mechanism for providing statements for children with special educational needs has let down many children and parents progressively over the years. That is exactly why we propose to introduce, in the Bill now in Committee, a new code of practice to give guidance on the statementing

procedure, new time limits and a tribunal to provide an independent source of appeal. I believe that all those measures will go a long way towards enabling the statementing process, which is vital to a small but important number of children with special educational needs, to work properly. As for the other children involved, we have strengthened the Bill's provisions to ensure not only that all schools are aware of their responsibilities, but that they spell out those responsibilities clearly. They will be inspected in regard to their responsibilities. That is the way in which to proceed.

Mr. Bowis: Does my hon. Friend agree that, although resources for special educational needs must be kept under constant review, the clear message from the Audit Commission was that the problem was not lack of resources but the fact that some local education authorities did not give high enough priority to the statementing process? Will my hon. Friend send the message to every education authority in the country today that authorities should not wait for the measures in the Bill, good as they are, but should get on with the process now and protect the children currently in need?

Mr. Forth: My hon. Friend, who takes a great interest in such matters, is absolutely right. It is not so much a matter of the resources available as a question of how they are deployed. Many local education authorities have demonstrated that, with the right sense of priorities and the right management practices, they can fully fulfil their obligation to children with special educational needs. I believe that the Bill will provide the proper framework to ensure that all authorities do that in future; in other words, it will enable us to raise all of them to the excellent standard of the best.

Graduates (Employment)

Mr. Ashton: To ask the Secretary of State for Education what percentage of university graduates left university last year and went straight into full-time employment.

The Parliamentary Under-Secretary of State for Further and Higher Education (Mr. Tim Boswell): Of those first-degree students whose first destination is known, about 50 per cent. went into full or part-time employment in the United Kingdom or overseas in 1991, the latest year for which figures are available.

Mr. Ashton: Is the Minister aware that the figures that I have obtained from the Library are very different? According to my figures, of 70,000 graduates, only 32,000 obtained jobs; the rest had to go on studying, because they could not find work—apart from the 7,000 who were still on the dole six months later.
Is the Minister aware that unemployment among graduates has risen by 50 per cent. in three years? Why are we training these youngsters? Are we doing it to provide the best-educated dole queue in the world so that the Japanese can come in and exploit them as there is no minimum wage? What is the purpose of it all?

Mr. Boswell: The purpose of education is long term. It is to secure a trained, skilled and motivated work force in which graduates will play a leading part in terms of their chances of employment and their salary structure in the years to come. The hon. Gentleman has taken the worst


possible construction of the figures. He has not, for example, looked at the "Graduate Employment Prospects Review" for the current year which, while stating that this is a difficult year, says that we are in a difficult but not impossible situation and that employers are optimistic about the future. The hon. Gentleman should not use the disappointments of today to dissuade people from going to college to build for their tomorrow and for the country's future.

Mr. Hawkins: Will my hon. Friend join me in welcoming the fact that there are more than 40 per cent. more students in higher education now than there were in 1980? Will he also join me in condemning the reduction in grant for students, especially mature students, by the Labour-controlled Lancashire county council?

Mr. Boswell: I accept my hon. Friend's first point. There has been a huge expansion in graduate numbers, and I make no apology for that, as I do not want to return to elitism—I want people to go to college if they are qualified to do so.
As for further education and the discretionary awards in Lancashire, that is a matter for the council but also for the electors in May. I am sure that the electors of Lancashire will draw the appropriate conclusions.

Mr. Rooker: Does the Minister accept that investment in higher education is investment in the human capital of the nation, but that there may be a threat to the quality of that investment in higher education and to the quality of future graduates if the funding council is given control of quality in universities? Will not that pose a threat to academic freedom throughout the country—a threat which is as unacceptable from the right as it would be from the left? Self-regulation is good enough for the City, and in respect of quality it is better that self-regulation comes from the universities rather than being imposed on them by the funders, which would pose a threat to the quality of future graduates.

Mr. Boswell: I agree with the hon. Gentleman about one objective—that investment in higher education is clearly an investment in the country's future. That is right. With respect, however, I disagree with him on his point about quality and the analogy that he drew with the City. So far as I know, the City does not run on taxpayers' money—[Interruption.] Higher education is financed with several billion pounds of taxpayers' money and we wish to ensure proper value for money—not on my account, but through the Universities Funding Council, which is to establish an independent and proper system of assessment of the quality delivered.

Mr. John Marshall: Will my hon. Friend confirm that since the introduction of student loans there has been a substantial increase in the number of students going to university? Does that not give the lie to the prophets of doom whose forecasts were as inaccurate as their policies are unacceptable?

Mr. Boswell: I very much agree with my hon. Friend. We want people to go to university. We are delivering that, and the quality and standards in universities to go with it. We have no apology to make.

Teacher Morale

Mr. Barry Jones: To ask the Secretary of State for Education if he will make a statement on the morale of teachers in local education authority schools.

Mr. Patten: Teachers have responded admirably to the challenge of raising standards and extending choice, and the Government and the country are grateful to them. The Government's reforms have helped parents to appreciate how much good teaching contributes to their children's education. Effective management at school level is the key to motivating teachers and ensuring that good performance is identified and rewarded.

Mr. Jones: After the waves of change and legislation, why do Ministers not slow down and, in particular, listen? It would help. Why has the right hon. Gentleman been so rude to parents and so condescending to the profession? Does he not know that he is seen as a posturing and dictatorial figure in education—in fact, as a sort of Mussolini of the school service?

Mr. Patten: I shall not take that accusation of fascism to heart, Madam Speaker, and nor will you. I suppose that it is the kind of thing that we expect to hear from the hon. Gentleman Member for Alyn and Deeside (Mr. Jones), who is a parliamentary consultant to the National Union of Teachers. It is always important to know which hon. Member is the parliamentary consultant for the National Union of Teachers because he or she will remain a marked person for the rest of this Parliament.
Since last April, my right hon. and noble Friend Baroness Blatch in the other place, my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) and I have been to more than 75 schools, not talking at teachers but listening to them. Perhaps I could give the hon. Member an example. When Baroness Blatch, my hon. Friend the Member for Mid-Worcestershire and I visited those schools, we were told by a number of primary school teachers that they felt that the national curriculum was a bit overcrowded.
In response to listening to teachers, we announced two Mondays ago that we would introduce over a period a review of the national curriculum. There is no going slow on the Government's schools policy.

Mr. Barry Jones: On a point of order, Madam Speaker. I am not a parliamentary consultant for the National Union of Teachers.

Mr. Patten: rose—

Madam Speaker: Order. I call Mr. Clappison. [Interruption.] Order. How can I hear unless hon. Members are quiet?

Mr. Patten: Further to that point of order—

Madam Speaker: Order. There can be no point of order in the middle of Question Time. Perhaps we can deal with the matter at the end of Question Time.

Mr. Clappison: Will my right hon. Friend join me in expressing concern at the destructive effects on the morale of teachers, parents and pupils of the small minority of teachers who undermine testing and water down standards in our schools, as in the case of the small minority of


English teachers who want to set aside our rich literary heritage and abandon Shakespeare? Is that a case not so much of morale as of fitness to teach?

Mr. Patten: I think that we should be grateful to all teachers who work hard. There is always a small group of people who simply do not like the way in which a Government conduct their education policy. It is those people, especially in the National Union of Teachers, who have been waging such a battle against testing. I predict that we will see the Labour party fight hard in an attempt to undermine our education reforms. It was from the Register of Members' Interests that I took the attribution to the hon. Member for Alyn and Deeside.

Grant-maintained Schools

Mr. Pope: To ask the Secretary of State for Education what arrangements will be made to protect the interests of staff at a school that transfers from local education authority control to grant-maintained status.

Mr. Boswell: The contracts of employment of staff automatically transfer from the local education authority to the governing body of a grant-maintained school, which is required to observe all aspects of employment law. Staff at grant-maintained schools have the same rights as other employees to take their case to an industrial tribunal or to the courts.

Mr. Pope: Does the Minister accept that there is a legal obligation on GM schools not only to accept the terms and conditions that exist for teaching and non-teaching staff but to maintain the union recognition agreement when there is evidence—and I have evidence—that conditions of service for teaching and non-teaching staff in GM schools are worsening? Can he give an assurance to the House, which he would not give to the Standing Committee, that the Minister has not only the power but the political will to intervene?

Mr. Boswell: The hon. Gentleman is referring to the acquired rights directive which is under consideration in another Standing Committee of the House. Whether or not the directive is enacted in our domestic legislation, it already requires that grant-maintained schools must recognise unions for the same purposes and to the same extent as they were recognised by the local education authority until such time as the agreement is amended or terminated.

Dame Angela Rumbold: Can my hon. Friend advise my local authority, the teachers who work therein and those people in schools who are considering going grant maintained what protection there is for teachers who wish to participate in, or at least give their assent to, becoming grant maintained against the local authority that indicates that they may be acting contrary to its wishes?

Mr. Boswell: I had the opportunity to attend a college in Surrey yesterday, and I know of the good reputation that my right hon. Friend's local education authority generally holds. I emphasise, however, that in the Education Bill, which is currently under consideration, we have taken steps to ensure that obstruction and interference by the local authority—whether Surrey or elsewhere—as they may bear on individual teachers involved in a compaign, should be reduced to a minimum

and, if possible, eliminated. I am sure that no hon. Member would wish to sanction or condone such unfair and inappropriate practices.

Mr. Tony Lloyd: The Minister is telling the House about unfair and inappropriate practices. He must be aware—the Standing Committee considering the Education Bill has certainly been made aware—that grant-maintained schools have already sacked teachers and altered their contracts of employment, refusing, for example, to recognise length and continuity of service or to allow maternity and other benefits to be properly enjoyed. Is it the Government's intention that grant-maintained schools should erode the employment conditions of teachers to save money? If, as the Minister implies, the answer to that is no, will he take steps to prevent grant-maintained schools from doing that?

Mr. Boswell: The purpose of the discussion in the Standing Committee was to consider the effect of the acquired rights directive on conditions of transfer. If the hon. Gentleman is inviting me to say that no grant-maintained school may ever dismiss a teacher, I must remind him that, under the local management of schools arrangements, the governors of schools within the maintained sector already have the power to hire and fire, and I know of at least one locally managed school where two teachers have been dismissed through redundancy. There is no essential difference between the two sectors in that respect.

Mr. Harry Greenway: Does my hon. Friend agree that, with children queuing up to get into grant-maintained schools and with strong community and parental support for them, the morale of teachers in such schools is unprecedentedly high?

Mr. Boswell: As ever, my hon. Friend is exactly on the point. The survey recently conducted by Grant-Maintained Schools Ltd. shows a positive side on employment practices as well as on the delivery of education. My hon. Friend is right: staffing levels are generally better and staff turnover is very much lower than in the equivalent maintained schools.

Teaching Practice

Mr. Mike O'Brien: To ask the Secretary of State for Education if he will make a statement on his Department's policy and role in respect of instructing teachers (a) what to teach and (b) how to teach it.

Mr. Patten: I have recently brought to schools' attention advice from the Office for Standards in Education—the inspectorate—and the National Curriculum Council on strategies for improving curricular organisation and classroom practice.

Mr. O'Brien: Is not there a real danger that the Secretary of State will become too involved in the way in which things are done in the classroom and too prescriptive and rigid about the way in which teachers teach? Should not we trust teachers, governors and heads to decide how teaching should be done in the classroom, rather than the state being involved in every single decision?

Mr. Patten: I agree with some of what the hon. Gentleman says. There is a wide spectrum of opinion


among those interested in education—from right to left and from traditional to progressive—that regulation should not be too prescriptive and that there should not be too much interference in what happens in the classroom. Nevertheless, the National Curriculum Council and the inspectorate made individual reports to me at the same time saying that they felt that a number of practices that had largely been dropped in primary schools in the 1960s and early 1970s, such as setting and whole-class teaching, were practices from which children should benefit. It was important to draw the conclusions of those two bodies to teachers' attention.

Mr. Anthony Coombs: Does my right hon. Friend agree that it is pure common sense, as the National Curriculum Council and OFSTED said in their reports last week, that primary teachers should do more whole-class teaching, that they should have an idea of exactly the curriculum that they are meant to be teaching and that it is not in any way ideological to set or stream pupils according to their ability? Does not the fact that the hon. Member for Dewsbury (Mrs. Taylor), the Opposition spokesman, calls those common sense remarks "fanatical doctrine" show the extent to which she is out of touch with parental opinion in Britain?

Mr. Patten: I cannot improve on what my hon. Friend has said about the hon. Member for Dewsbury (Mrs. Taylor). It is very important that when parents make up their minds about the school to which they wish their children to go, they know not only what the examination results are and something of the ethos of the school, as well as how religion is taught and what sports are available, but what teaching styles are used in the classroom. I am sure that parents have a right to such knowledge. They have a right to know whether setting is used and whether there is whole-class teaching. I intend to make certain that in their prospectuses for next year all schools will be required to give an accurate description not only of what they teach but of how they teach.

Mr. Don Foster: Does the Secretary of State accept that his Department, in addition to having a policy about instructing teachers, should have a policy of listening to teachers? Can he give us any evidence that his Department is doing that?

Mr. Patten: There is a range of evidence from my meetings with teachers, parents and governors during more than 75 visits to schools since last April. Week after week after week, individuals and groups of teachers come to see me and my ministerial colleagues to discuss just these issues.

Grant-maintained Schools

Mr. Pawsey: To ask the Secretary of State for Education how many teachers are now employed in grant-maintained schools; and how many children are educated in such schools.

Mr. Patten: It is estimated that some 14,000 qualified teachers were teaching more than 236,000 pupils in January 1992 in schools in England that are currently grant maintained.

Mr. Pawsey: These are indeed impressive figures, which underline the success and the importance of grant-maintained schools. Can my right hon. Friend speculate about what the reaction of teachers and parents will be when they discover that the hon. Member for Dewsbury (Mrs. Taylor) has said that if the Labour party were elected to government they would abolish grant-maintained schools?

Mr. Patten: When I left the Department to come to the House today there were 622 yes votes for grant-maintained status. We are well on target towards the projected 1,500 by 1 April 1994. I can only imagine the despair in the hearts of teachers, governors, parents and others connected with the growing number of grant-maintained schools at the pledge of the hon. Lady—a pledge now on the record, including television—that if she ever gets into power she will abolish all grant-maintained schools straight away.

Mr. Steinberg: May I inform the Secretary of State that I am the consultant to the National Union of Teachers—and proud of it. Now that the policy of having an avalanche of schools opting out has failed, do the Government intend to force schools into grant-maintained status?

Mr. Patten: It is very interesting that the hon. Gentleman has come out as the NUT's representative in this House. He has taken up the battle from his hon. Friend the Member for Alyn and Deeside (Mr. Jones) who, I understand, laid down the burden a few weeks ago, although his name is still in the Register of Members' Interests, which is where I got the information. I apologise, of course, for the inaccuracy. I hope that when the hon. Gentleman is next consulted by the National Union of Teachers, he will advise it how out of touch with the general public is its campaign against testing.

Sir Michael Neubert: Is my right hon. Friend aware of how welcome today's announcement of grant-maintained status will be to the teachers at Frances Bardsley school in my constituency? It will enable them to continue to provide the excellent education that girls receive there and, perhaps more important, will ensure the continued availability of badly needed single-sex girls' places in the borough. If, as I hope will happen, the school bids to retain its sixth form, will my right hon. Friend give that proposal his most sympathetic consideration?

Mr. Patten: I, too, hope that grant-maintained schools and county-maintained schools will continue to diversify their spread of interests and to offer the choice and diversity in education that many of us wish to see.

Mrs. Ann Taylor: Will the Secretary of State withdraw the remark—a remark that he has made on several occasions—that in ballots concerning grant-maintained status, "no" votes arise only because of intimidation by local education authorities? Do the ballots of the last few days—in Conservative North Yorkshire, a school voted no by 67 per cent.; in Conservative Cambridge, a school voted no by 72 per cent.; in Conservative East Sussex, a school voted no by 80 per cent.; and in Conservative West Sussex, a school voted no by 90 per cent.—indicate intimidation by local authorities?

Mr. Patten: I congratulate the hon. Lady at having a second go during Question Time and I answer her question


by making only two points. On eight out of every 10 occasions when parents are asked whether they wish their schools to be grant maintained, they vote yes, as they voted yes in Blackburn yesterday.

Dame Elaine Kellett-Bowman: In view of the outstanding success of grant-maintained schools in Lancashire, where the teachers are only too happy to come out from under the bureaucratic Lancashire county council, may I ask my right hon. Friend to suggest to any teachers who may be apprehensive to visit some of those schools to see how successful they are?

Mr. Patten: It is always good for hon. Members in all parts of the House to visit grant-maintained schools. I do not know whether the hon. Member for Dewsbury and her hon. Friends have ever been to a grant-maintained school. They should do so, because they would find queues of parents outside wishing to send their children there and they would see the walls bulging and standards improving continuously.

Oral Answers to Questions — PRIME MINISTER

Engagements

Ms. Lynne: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister (Mr. John Major): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Ms. Lynne: Will the Prime Minister confirm that he is aware of the case of my constituent Stefan Kiszko, who was wrongfully imprisoned for 16 years for the murder of Lesley Molseed? An inquiry is being conducted by the Lancashire police into the investigation of the case by the West Yorkshire police. Will the right hon. Gentleman give a personal commitment that when that inquiry is completed, the full facts will be made known to Stefan Kiszko and his mother and to the relatives of Lesley Molseed so that they will at long last know why there was a miscarriage of justice?

The Prime Minister: I am aware of that distressing case and I am grateful to the hon. Lady for giving me notice that she would raise that specific point. As she will know, the then Home Secretary acted to refer the case to the Court of Appeal as soon as he had received and considered the results of the police inquiry that he had ordered. As a result of that, Mr. Kiszko's conviction was quashed.
The Home Secretary has agreed that compensation should be paid to Mr. Kiszko. I shall ask my right hon. and learned Friend to pursue with the police—whose responsibility it is—the question of publishing information about the case with the objective of publishing as much information as possible, subject of course to the need to avoid prejudicing criminal proceedings.

Dr. Liam Fox: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Dr. Fox: Is my right hon. Friend aware that the news that Oman has ordered 36 Challenger tanks and Saudi

Arabia 48 Tornado jets is extremely welcome, especially in the west country, where many jobs rely on the defence industry? Is he further aware that the chairman of British Aerospace has said that those deals would not have been concluded had it not been for the direct intervention of my right hon. Friend?

The Prime Minister: I am grateful to my hon. Friend for those comments. Those successes by British companies show precisely what British exporters can achieve and underline the importance of the partnership between the Government and business and industry. The orders and other business concluded during my visit to India are worth literally billions of pounds and will sustain about 20,000 jobs in this country. They also reflect the close relationship between this country and the other countries concerned. But one of the most important aspects of such visits is not necessarily the business gained on that occasion but the opportunity for business that may result in the future.

Mr. John Smith: Does the Prime Minister consider it to be satisfactory that many economic commentators regard the Sunday Times as a more credible guide to Government economic policy than his Chancellor of the Exchequer?

The Prime Minister: Unlike the right hon. and learned Gentleman, I shall deal with realities—[Interruption.] It may be that many people would like to find divisions between my right hon. Friend and me, but there are none.

Mr. John Smith: Does the Prime Minister read the newspapers in which city commentators say, and I quote one:
It comes down to a question of whether people believe the Government or the Sunday Times. Frankly, they believe the Sunday Times."?
How can people be expected to comprehend Government intentions when the Government and No. 10 deliberately brief the press to undermine the Chancellor on Saturday and then on other days go into reverse because of the damage done to the economy? Is it not the case that the right hon. Gentleman supports his Chancellor in public while undermining him in private, just as his predecessor did?

The Prime Minister: The right hon. and learned Gentleman is clearly in the business of mischief-making, but he is wasting his time. My right hon. Friend and I are not going to be pushed around by that sort of remark. My right hon. Friend has cut inflation to 2½ per cent; has continued our tax reforms; has introduced an autumn budget which was widely welcomed by business and industry; and has cut interest rates to 6 per cent. That is a record which he can be proud of and which I fully support. It is the essential prerequisite for growth, and the fact that it has been achieved is largely due to my right hon. Friend the Chancellor.

Mr. John Smith: Despite the Prime Minister's bluster, is it not clear that the events of last weekend show once again that we have a Chancellor with no credibility and a Government with no economic policy? Does the Prime Minister not appreciate that the people of this country, who face increasing recession and rising unemployment, are appalled to see the Prime Minister and the Chancellor behaving like two ends of a pantomime horse?

The Prime Minister: I am astonished that the right hon and learned Gentleman should say that, in view of what his hon. Friend the Member for Dagenham (Mr. Gould), said only yesterday about Labour's recent budget for jobs. He said that it is
already sinking without trace as virtually all of Labour's economic policies have sunk without trace in recent years
When the right hon. and learned Gentleman was shadow Chancellor he said:
The Opposition will not be satisfied until interest rates in this country are roughly equivalent to interest rates in other competitor countries in the European Community".
Now our interest rates are below those of other countries and the credit for that goes to my right hon. Friend the Chancellor.

Mr. Carrington: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Carrington: Does my right hon. Friend recall that when he kept Britain out of the social chapter President Jacques Delors accused him of having made our country a paradise for foreign investment? Has the decision by Hoover to move its factory from France to Britain proved that Jacques Delors was right in what he said and that my right hon. Friend was quite right in what he did?

The Prime Minister: I do agree with that reported quote by Mr. Delors. I also agree with the union leader, Mr. Airley, who in a newspaper article in the last few days said:
We have secured one of the best pieces of news we have heard on the Scottish industrial front for many years.
I agree with him about that. The fact is that industry will locate where it can be most efficient and most competitive. No one compelled our partners to sign up for the social chapter and they were amply warned by me and by others of the consequences if they did so. The social chapter adds to costs, destroys jobs and destroys competitiveness. That is what the Labour party would sign up to. It was vital that we stayed out of the social chapter. We did. We have done. We shall continue to do so.

Mrs. Anne Campbell: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mrs. Campbell: Will the Prime Minister tell the House what advice he will give to the 1,200 small businesses that went bust last week, including that of his constituents Doug and Eileen Belcher who run the post office in Great Stukeley and delivered the Prime Minister's newspapers until they went bust?

The Prime Minister: As the hon. Lady would know if she had her facts straight—[Interruption.]

Madam Speaker: Order. Will hon. Gentlemen resume their seats.

The Prime Minister: I would say to the hon. Lady that what is needed to make those small businesses grow is precisely the economic ingredients of low inflation and low interest rates which we have now produced in this

economy. What would destroy those jobs is the social chapter and the additional imposts that the Labour party would place on small, medium and large businesses.

Mr. Willetts: There are more than 7,000 regulations affecting businesses in this country. Is my right hon. Friend aware of the widespread support for his initiative to cut back on red tape which is essential for small businesses and consumers, and can he assure the House that progress was made on that subject at his meeting this morning?

The Prime Minister: Yes, I can assure my hon. Friend that progress was made on that this morning. I met colleagues from every Government Department, and we have agreed a way in which to examine each and every one of 7,000 individual Government regulations. We agreed that in future any proposal for new regulations will have specifically to spell out the cost to British companies. It is a huge task to review the regulations, but it is necessary and it is very much in the interests of British business and the creation of jobs that we do so.

Mr. Bayley: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Bayley: Three weeks ago when the pound stood at 2.51 deutschmarks, the Prime Minister said, and I recall his exact words, that Britain had the right exchange rate for recovery. Now that the exchange rate is 2.38 deutschmarks, will the Prime Minister tell us what has gone wrong?

The Prime Minister: The hon. Gentleman clearly fails to notice what has been happening. He failed to notice the CBI survey that showed business confidence at its highest level for five years, he overlooked the 3i survey that showed a big increase in optimism in small and medium-sized firms, and he failed to notice also the change in the inflation rate and interest rate that are the essential prerequisite for sustained growth with low inflation in this country.

Mr. Hague: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Hague: Does my right hon. Friend agree that one of the greatest contributions that the House can make to the success and enterprising spirit of British industry is to do away with as large a number of petty restraints and regulations as possible? Will he reaffirm that objective, notwithstanding the preference for still more obstacles to businss shown by the Opposition?

The Prime Minister: My hon. Friend is entirely right and he implicity spells out one of the differences between the two sides of the House. This side believes in cutting burdens on business and the Opposition side believes in adding burdens to business.

London Transport

Mr. Corbyn: To ask the Prime Minister what further plans he has to meet any representatives of users of London underground trains and London buses.

The Prime Minister: Ministers in the Department of Transport and their officials frequently meet representatives of users of public transport in London.

Mr. Corbyn: Will the Prime Minister take this opportunity to look at the problems of London's transport and recognise that the people of London do not want to see their bus service deregulated? They want investment in the underground service rather than the cancellation of the capital programme. They want cheaper fares so that less pollution should occur in the air of London and much less congestion on its roads. Will he now intervene to restore a decent public transport system to our capital city?

The Prime Minister: As the hon. Gentleman will know, the Government are providing finance of close on £1 billion a year for London transport over the next three years—more than in any recent year. As far as London buses are concerned, we are fully committed to the privatisation of London bus subsidiaries, starting later this year, followed by deregulation as soon as legislation permits. We propose to do so because it will provide bus users with the benefits of competition from private operators keen to serve the market more efficiently than nationalised industries have done.

Mr. Budgen: While my right hon. Friend is identifying the reasons for the better propsects for the British economy—

Madam Speaker: Order. The question is a closed question. It has to relate to London transport.

Mr. Budgen: —in particular, the prospects for the buses in London, could he not also find time to say a kind word for the speculators and all those who took us out of the exchange rate mechanism on 16 September?

The Prime Minister: I am not sure that many of those speculators would have used London transport.

Engagements

Mr. Gunnell: To ask the Prime Minister if he will list his official engagements for Tuesday 2 February.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Gunnell: The Prime Minister will have noted that each time that his Chancellor lowers interest rates, the banks and building societies pass on a lower percentage to their customers and, therefore, increase their margins. What does the Prime Minister plan to do about that? Is it that his relationship with the banks is not cosy enough, or is it too cosy?

The Prime Minister: As far as the building societies and many of the banks are concerned, the hon. Gentleman is not accurate about the reduction in interest rates during the past few months. There has been concern about whether sufficient of the interest rate reductions have been passed on and my right hon. Friend the Chancellor has been in touch with the Governor of the Bank of England and with the chairmen of the main banks in the United Kingdom. I think that the hon. Gentleman is aware of that dialogue.

DAF Trucks

Mr. Robin Cook: (by private notice): To ask the President of the Board of Trade and Secretary of State for Trade and Industry whether he will make a statement on the cessation of trading of Leyland DAF and the possibility of Government assistance.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): The Government have been disappointed to hear about the financial problems facing the Dutch-based company DAF NV, which today filed for a legal moratorium on its debts. We are concerned about the implications for its United Kingdom operations.
I regret that it has not been possible for the company and its bankers to put together a satisfactory restructuring package. We have kept in close contact with the company and with the Bank of England, which has been closely involved in trying to help the relevant United Kingdom banks come to an agreement with their Dutch and Belgian counterparts, which have led the consortium. The United Kingdom banks have done all that they were asked, but unfortunately not all the other banks have felt able to agree an acceptable financing package with the Dutch and Belgian Governments.
The legal position of Leyland DAF should be clarified this afternoon. We have not participated directly in the discussions on the financial restructuring, as that primarily related to the company's Dutch and Belgian activities.
The Government stand ready to work closely with Leyland DAF, the receivers, banks and other interested parties to mitigate, as far as possible, the impact on United Kingdom jobs. We hope that it will prove possible for all those involved to find a means of creating a business with a long-term commercial future out of at least part of DAF's United Kingdom operations.
While regretting the particular circumstances affecting Leyland DAF, we must remember that the United Kingdom vehicles sector has made excellent progress during the past few months. In the midlands alone, Rover recently announced a 5 per cent. increase in output for its four-wheel drive vehicles in 1992 and a new £9.5 million fleet deal; Jaguar will be launching a £560 million investment plan on the back of a sharp rise in sales in the United Kingdom and the United States markets; and Lucas is to build a new £3.7 million factory, creating 350 jobs. We must continue to build on those extremely encouraging prospects.

Mr. Cook: Will the President of the Board of Trade précis his answer by confirming that, when I asked what Government assistance may be available, the answer that we got today was that there will be none for Leyland DAF? Is he aware that the news that he has just confirmed is another bitter blow to Britain's shrinking industrial base? Will he try to understand that it is not enough to express disappointment for the work force, as he did today? The work force, who face the loss of their jobs, want to know what he is going to do to help save them.
Will the right hon. Gentleman remember that he prefers to be known as the President of the Board of Trade? Does he know that Leyland DAF is the leader in the British truck market? If that market share goes on imports, how many more millions will it add to the trade gap? Will he

remember that he is the Minister responsible for regional policy? What help will he offer the communities whose local economy will be devastated if those factories and their suppliers close?
Will the right hon. Gentleman remember that he promised to intervene before breakfast, before lunch and before dinner? Why did he not intervene to stop that major British company going into receivership?
Why is it that the Belgian and Dutch Governments were willing to underwrite the loans that would secure the company's future but not the British Government? Why did the British Government not support that rescue package by underwriting it?
Will the right hon. Gentleman accept that, as advised this afternoon by DAF, the minority who wrecked the deal in the banking consortium were all British banks—NatWest, Barclays and Lloyds? Why has he not had talks with them to press them to take the longer view of the Dutch and Belgian banks who want to rescue, not close, the plants?
Today 5,500 people face the prospect of redundancy. When they hear the Government talk about recovery, it must sound like a Government who do not know what is happening in the real world. Will the President of the Board of Trade do them the justice of now admitting that Britain faces a real industrial crisis and needs an industrial strategy that tackles it?

Mr. Heseltine: The hon. Member practises his usual technique of undermining any British company or institution. He would have done well to read the press release put out by DAF, a copy of which I have. Perhaps I can quote from it in dealing with the serious allegation that the hon. Member made:
However, both Governments"—
that is, the Dutch and Belgian Governments—
have informed the Board of Management of DAF N.V. that they consider a further delay in a final decision on the restructuring and long term financing proposals to be unacceptable …
I do not understand how, faced with that public information, the hon. Member can suggest that the British Government have been dilatory in performing their duties. Nor do I understand how he can name and single out three British banks which, he says, did not co-operate without, as far as I am aware, one shred of evidence to substantiate the charge. Does he understand the damage that he does to British banking interests by so careless a use of language?
The Labour party might have learned from its experience in putting hundreds of millions of pounds through the National Enterprise Board into the motor industry when it suggests handing out short-term working capital to a company of this sort that such action is unlikely to solve the problems that it ought properly to address. Will the hon. Member realise that my Department has done all that has been asked of it by the company itself? We have been in touch with the company, and it has made no specific request to us for specific financial aid of the sort that we are discussing today. We have been in touch with the Bank of England, and we know that it has been in touch with British banks.
All the hon. Member seeks to do is to make mischief out of a very difficult situation. He also fails to understand what receivership is about. There is every reason to hope that at least some of these jobs can be saved. What now must happen is an orderly process of analysis so that other


people in the market can make offers for parts of this company in order that there can, we hope, be a viable commercial opportunity for those parts of the business that can stand competitive strains.

Mr. Den Dover: Will the Secretary of State confirm that in Chorley and Leyland in Lancashire there is purpose-built accommodation, a test track for vehicles, a major assembly plant for vehicles which is the largest in Europe, and Multipart office and warehousing? Will he also confirm that the labour force in Lancashire is one of the hardest working, best qualified, most skilled and most co-operative and, therefore, looks forward to constructive discussions?

Mr. Heseltine: I know that my hon. Friend the Member for Chorley (Mr. Dover) and my hon. Friend the Member for South Ribble (Mr. Atkins) have been extremely energetic in making sure that the best interests of their constituents were drawn to our attention. I am delighted to confirm the references that my hon. Friend made to the work people of Lancashire. I am equally delighted to know that, while national average unemployment is 10.5 per cent., in the travel-to-work area of Preston it is 7.9 per cent.

Mr. Terry Davis: Is the Secretary of State aware that the Leyland DAF van factory in Birmingham increased its production, its sales and its market share last year in spite of the reduction in the market as a result of the recession, that 2,000 people work at that factory in my constituency, and that the factory has been forced to stop production this afternoon because suppliers have stopped deliveries, putting even more thousands of jobs at risk? Is the right hon. Gentleman aware that the factory has, in turn, been forced to stop its deliveries, including those of components of the Range Rover—the four-wheel drive vehicle mentioned by the Secretary of State—so putting yet more jobs at risk?
The Dutch and Belgian Governments have been engaged in direct talks with the banks in an attempt to save jobs in those countries. Why will not the British Government talk to the banks to attempt to save British jobs and avoid an industrial disaster?

Mr. Heseltine: I fully understand that the hon. Gentleman is deeply concerned about the large number of jobs that will be affected in his constituency. I can only repeat what I said in my first reply: my Department has been absolutely satisfied that the British banks and the Bank of England have been fully engaged in the necessary dialogue. It is now a matter of the administrators, the receivers and management of the company working out proper arrangements to secure, where possible, commercially viable jobs within the DAF organisation. That will not be helped by exchanges across the Dispatch Boxes of the House of Commons based largely on inaccurate allegations from the Labour party. We must let the receivers do their job. Jobs may well be saved as a result.

Mr. Iain Mills: Does my right hon. Friend recognise that many of my constituents live near the factory in Birmingham and, like the constituents of Opposition Members, have contacted me as they are greatly concerned about both the direct effect on their jobs and the indirect effects on the many component suppliers? Will he give me an assurance that he will do everything

possible to facilitate a quick solution, whether partial or total, to the problem? The workers have literally been presented today with a closure.

Mr. Heseltine: I give my hon. Friend an unqualified assurance of the sort that he requested. My Department has kept in touch with DAF over this difficult period and will certainly continue to do so. Any proper assistance that we are able to provide we will provide.

Mr. Roy Hattersley: If, as the Government claim, the recession is at last gradually coming to an end, how can it make sense to allow the collapse of a company which, when recovery comes, would make a substantial contribution to our balance of payments? The Secretary of State will recall that he said to my hon. Friend the Member for Livingston (Mr. Cook) that no request had been made to the Government for immediate emergency support to see the company through its difficulty. Were such a request to be made, what would the right hon. Gentleman's answer be?

Mr. Heseltine: I think that the right hon. Gentleman will realise that the company has been seeking a solution to its difficulties over a significant period. Were there to be a request for the short-term working capital which is, as I understand it, at the heart of the dilemma today, such a request could be put to my Department by a myriad different companies in the motor industry and many others. It would be extremely difficult to find any argument that I could deploy for providing taxpayers' support for working capital for one company to enable it to compete more effectively with other British companies in the same industry that produce competitive products.
The second issue involves the development of an alternative product to the van, which is the principal product line of the DAF organisation in the midlands. That issue was discussed with my Department before the last election, when figures of the order of £450 million were suggested as the possible investment needed to deal with the long-term programmes. We made it clear that we could not contemplate a project of that sort. Under the regional assistance that my Department is entitled to provide, the maximum amount available would be £18 million. The House should understand that we are either talking about subsidising short-term losses and the implications of that for a wide number of companies in this country or we are talking about dramatically large investment capital projects, and the House having to decide why we should invest in one company when a range of other companies which have invested their own capital are surviving in the marketplace.

Mr. John Butcher: I congratulate my right hon. Friend on resisting the ghosts of Upper Clyde Shipbuilders. My right hon. Friend is aware of the large implications that this has for the engineering industry generally in the west midlands. Will he reassure me that he will place his office at the disposal of private sector bidders, who may be involved in quite complex negotiations across the North sea, in order to expedite such negotiations, whether purely British companies or British companies in alliance with European companies, so that we may have a speedy solution?

Mr. Heseltine: I welcome my hon. Friend's constructive approach, which is precisely the approach that is likely to


bring the best possible outcome for the large numbers of people employed by DAF and for the viability of the separate component parts of that organisation.
There is no question but that in Leyland in Lancashire there is a modern factory with order books for an important product, and one hopes that there will be alternative owners and capital for that product. It must also be self-evidently the case that the products sold by the company over the years leave considerable demand for spare parts which, again, must offer potential jobs in some companies based on what we have here today. But none of this can be dealt with without a detailed set of negotiations conducted by the receivers in the calm atmosphere that is essential to constructive progress.

Mrs. Audrey Wise: Is the Secretary of State aware that compliments to highly skilled, hard-working workers will not be well received unless they are accompanied by some action? The right hon. Gentleman is apparently willing for taxpayers' money to be used to pay unemployment costs rather than invest in maintaining them at work. He casts scorn on short-term capital investment. Why does he not then find some long-term solutions to prevent the 2,500 workers in the Preston-Leyland-Chorley area from being put on the scrap heap? If the right hon. Gentleman is so scornful of short-term solutions, who does he not look for long-term solutions?

Mr. Heseltine: The hon. Lady should have more faith in the quality of the work people and the quality of the product in Leyland. She would do well to remember that her party has indulged in massive long-term investment in the automobile industry with scant benefit to show for it.

Sir Giles Shaw: My right hon. Friend will be aware that this company was set up by his predecessors in office at the Department of Trade and Industry, and he will recall the substantial losses that were written off at that time to enable the consortium between Leyland and DAF to survive in order to employ those persons in Lancashire whose considerable skills were at risk. Can my right hon. Friend confirm that the project, which was initially to provide a trans-European prospect for commercial vehicles, where DAF would have the entry into the Community, still remains a realistic partnership on offer to any other company that may well seek to acquire the considerable assets which British taxpayers have supplied to that plant?

Mr. Heseltine: My hon. Friend is right. One of the arguments in favour of the DAF deal with Leyland in 1987 was that DAF would secure for Leyland greater access into the European single market. That it has done, and that is an additional asset now available within the negotiations that must come under way. It is obviously important that those negotiations are given a fair chance.

Mr. David Marshall: Is the Secretary of State aware that 500 jobs are at risk in the excellent Leyland DAF Albion works in Glasgow which makes axles for the company? As the Dutch and Belgian Governments are doing all that they can to help, will the right hon. Gentleman advise the Secretary of State for Scotland that the Scottish Office, Scottish Enterprise and

Glasgow Development Agency will need to do everything possible to protect and maintain those vital, highly skilled jobs in Glasgow?

Mr. Heseltine: The hon. Gentleman cannot have listened to what I said about the Dutch and Belgian Governments. They have made it clear that they are not satisfied with the arrangements that have been offered by the banks involved, so it would be wrong for me to suggest to any colleague of mine in the Government, including the Secretary of State for Scotland, that he should seek to act in a way that neither of those two Governments is prepared to do.

Mr. Phillip Oppenheim: While everyone is understandably concerned about the possibility of job losses, will my right hon. Friend bear in mind when considering requests for financial assistance the huge amount of Government money that the predecessor to Leyland DAF received in the 1970s? Does he recall that, under a Labour Government during the period that it received that money, manufacturing output in this country fell, whereas, despite the recession, it has risen under this Government? Will my right hon. Friend bear in mind that any money that he might give companies such as Leyland DAF would have to be taken from other companies that might better be able to utilise it in creating jobs and products that can be successfully sold?

Mr. Heseltine: My hon. Friend is perfectly right. I can only reiterate that the Labour Government's experience, through the National Enterprise Board, of investing huge sums of taxpayers' money in what was then seen as the creation of a long-term, viable automobile industry in this country was wildly unsuccessful. During the course of the 1980s, very largely as a result of inward investment in the industry, Britain can now enjoy the prospect of moving back to a trade surplus in the automobile industry. That is because we have viable companies with profitable records behind them. It is absolutely clear that no purpose is to be gained from trying to repeat the mistakes of the past and the Government trying to double-guess the commercial market in that industry.

Mr. Michael J. Martin: As my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) said, many people in Glasgow are dependent on the Albion motor works for employment. There are highly skilled engineers throughout the group, and if steps are not taken to protect their jobs Britain will lose an engineering base that has taken generations to build. If the right hon. Gentleman argues that the recession will soon be over, we shall need skilled men and women to cope with the new situation.

Mr. Heseltine: It is precisely because Labour tried to protect industry after industry from the effects of world competition that so much of Britain's manufacturing base was eroded. The then Government tried to protect it in the way that the hon. Gentleman suggests that we should do.

Mr. John Wilkinson: My right hon. Friend rightly said that he is willing to maintain a dialogue with interested parties. Will he discuss with his colleagues in the Ministry of Defence the military implications of the possible failure of Leyland DAF? As A. W. D. Bedford, another supplier of military vehicles to the British armed forces, failed only recently, will my right


hon. Friend and his MOD colleagues see whether some restructuring can be achieved, whereby the important indigenous capability to build military vehicles that Leyland DAF hitherto provided can be maintained?

Mr. Heseltine: My hon. Friend is right to draw attention to the Army truck order that was won by Leyland with the help of DAF. That contract has about another 18 months to go. That supports the point that I was making, that here is a company with a good product and order books—and, hopefully, someone in the commercial marketplace will come to invest in it.

Mr. Malcolm Bruce: Does the President of the Board of Trade recollect that at the time of the Leyland DAF merger I and others expressed concern about the long-term implications for the British truck industry? Admittedly, there has been investment, but the situation now is that a major sector of our industrial base faces destruction. Does not the right hon. Gentleman accept the inconsistency of his statement to the House? On the one hand, there are full order books and a competitive business; on the other, there is no role for Government in ensuring its continuity.

Mr. Heseltine: That is a classic example of the Liberal Democrats wanting it both ways. They claim to want a single European market and to believe in Europe, but the moment a company sets out to achieve a Europe-wide base they criticise us.

Mr. Richard Burden: If the right hon. Gentleman really believes that he and his Department were doing all that was necessary in the run-up to today's announcement, how does he explain the fact that last week there was speculation in the press, particularly in Holland, that jobs in Britain would be at risk because of the Government's failure to get involved in a rescue plan? Does the right hon. Gentleman dispute the figures and the effects on jobs in Birmingham, Glasgow and Leyland claimed by my hon. Friends? What does the President's statement amount to, other than a wringing of hands?

Mr. Heseltine: The hon. Gentleman can start with the employment of 5,500 people in Leyland DAF in this country. I do not accept that that automatically means that all those jobs are at risk. It is hoped that there will be commercial solutions, which will produce long-term, viable opportunities for at least parts of the company and, therefore, for a significant number of the work force.
I fully accept that there has been speculation about the company's future for some time. We were fully aware of that. The only issue is whether we should have joined the Dutch and Belgian Governments, and whether we would have reached a different decision from theirs. I do not think that it was necessary for us to join them, because

they were dealing with problems that were largely located on the continent; but, in view of the advice that we have received from banking sources, I do not see any reason for us to have reached a different decision.

Mr. Alex Salmond: Was the Secretary of State aware of the existence of the Albion works in Glasgow? He did not mention it until he was prompted. When did his Department first learn the extent of the serious financial problems enveloping the company? Was an intervention package prepared by his Department at any stage, and was such a package then rejected by the Secretary of State on political grounds? Has the right hon. Gentleman tried and failed, or has he just failed?

Mr. Heseltine: Yes, I was fully aware of the existence of the Albion factory in Glasgow. I have before me a list showing the location of Leyland DAF employees, and showing that the axles for the van were produced at the Albion works in Glasgow, which at the time employed some 500 people. The number of employees may have changed since then, but it is of that order.
The hon. Gentleman asked whether an intervention package had been presented. If he was asking whether we were prepared to put money into providing short-term working finance, I can tell him that we were not asked to do that, and that, if we had been asked, we would not have done it.

Mr. Bob Cryer: Was not selling off British Leyland to DAF an act of sabotage in the first place, and were not the Government warned at the time that it could lead to the extinction of a significant part of British manufacturing industry?
The Secretary of State keeps talking about refusing to put money into manufacturing industry. Given that he knows that between 10,000 and 20,000 jobs may be at stake—if the component manufacturing jobs are taken into account—why will he not argue the case for putting money into British manufacturing industry to keep our skills and our industry alive? He is prepared to put money into the dole queue to finance the millions who are unemployed, and to add to the queue at a rate of more than £9,000 per head per year. That simply does not make economic sense, or compassionate sense.

Mr. Heseltine: The simple answer is that, having been here as long as the hon. Gentleman, I have observed the track record of parties in government which have put money into what is called "manufacturing industry". It always results in mounting losses, and in Governments eventually having to face unpalatable conclusions. The Labour party knows that, but is not prepared to recognise it.

Several hon. Members: rose—

Madam Speaker: Order. We must now move on.

Points of Order

Mr. Max Madden: On a point of order, Madam Speaker. You will confirm that, from time to time, all Secretaries of State exercise quasi-judicial duties, and that they are also responsible for allocating funds without partiality or prejudice. Today, when I accused the Secretary of State for Education of conducting a political vendetta against Bradford local education authority, he shouted from a sedentary position, "You haven't seen anything yet." For as long as that statement remains on the record, many of my constituents and others in Bradford will believe what they have suspected for a long time—that the Secretary of State for Education is greatly prejudiced against Bradford local education authority and its schools.
What I would like to ask you, Madam Speaker—

Madam Speaker: Order. Points of order are now prefaced with such a long preamble that they are really an extension of Question Time. I hope that, from now on, every hon. Member who raises a point of order will come directly to the point of order itself. To do otherwise is to abuse the House's time.

Mr. Madden: What I would like to ask is this, Madam Speaker. Will you arrange for my concern to be conveyed to the Secretary of State for Education, and will you provide him with an opportunity to withdraw what he said earlier today?

Madam Speaker: I fear that that is an extension of Question Time. Of course, the Secretary of State and other right hon. and hon. Members will see in Hansard tomorrow what has been said. I am sure that it will be brought to the Secretary of State's attention.

Mr. Roy Hattersley: On a point of order, Madam Speaker. The procedural circumstances surrounding the Secretary of State's statement have changed; indeed, they changed as he was making it. During the statement, we discovered that the Government are not prepared under any circumstances to provide the rescue package which might keep Leyland DAF in business. The statement having been made in reply to a private notice question, the conditions are now ideal, indeed typical—even irresistible—for an emergency debate

as the Leyland DAF case now fulfils the three qualifications of the Standing Order. If you were to allow me to make such an application, Madam Speaker, such a debate would also enable us to clarify some of the discrepancies between the statement made by the President of the Board of Trade and that made by DAF. Will you allow me to make such a submission, Madam Speaker?

Madam Speaker: As the right hon. Gentleman and the House will know, all Secretaries of State, and hon. Members for that matter, are responsible for the statements that they make. It is not for the Speaker to comment on statements made by Secretaries of State. If the right hon. Gentleman cares to make an application to me, I shall of course consider it on its merits. I must not, as Speaker of the House, concern myself with the argument. As the right hon. Gentleman will understand, I must concern myself with the merits and I shall always look at applications purely in that light.

Mr. Hattersley: May I make an application?

Madam Speaker: I must have it in writing.

BILL PRESENTED

HEALTH AND SAFETY AT WORK (TOBACCO SMOKING)

Mr. George Foulkes, supported by Mr. Roger Sims, Mr. Sam Galbraith, Mr. David Alton, Dr. Lewis Moonie, Mr. Jerry Hayes, Mr. John Maxton, Sir John Stanley, Mr. Henry McLeish, Mr. Alistair Darling and Mrs. Maria Fyfe, presented a Bill to amend the Health and Safety at Work etc. Act 1974 so as to provide for the control of smoking in places of work; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 12 February, and to be printed. [Bill 125.]

STATUTORY INSTRUMENTS, &c

Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &amp;c.),

DEFENCE RESEARCH AGENCY

That the draft Defence Research Agency Trading Fund Order 1993 be referred to a Standing Committee on Statutory Instruments,&c.—[Mr. Arbuthnot.]

Question agreed to.

Maritime Safety

Mr. Eric Clarke: I beg to move,
That leave be given to bring in a Bill to make further provision regarding maritime safety; to regulate shipping flying flags of convenience; and for connected purposes.
As you will be aware, Madam Speaker, I am an ex-miner, not an ex-mariner, but I make no apology for introducing the Bill because we both fight mother nature to earn a living—or we did in the past.
The case for tighter safety standards at sea is overwhelming; the motor vessel Braer disaster brought that home to us all in this country, especially those in Scotland and Shetland. Ferries, cargo ships and other ships with hazardous cargoes are all covered in the Bill. We must demand a commitment to safety from the Government to be enshrined in legislation. We should not have to wait for disasters before action is taken.
Lives have been lost. European documents show that since 1986, on average 230 ships, or 1.1 million gross tonnes, are lost every year involving a loss of more than 1,000 lives. The highest percentage—46 per cent.—of accidents involves general cargo ships, 26 per cent. fishing vessels, 6 per cent. bulk carriers and 5 per cent. tankers. All the indicators are that the situation will deteriorate in the near future.
Approximately 35 per cent. of all bulk carriers sunk in the past 15 years have been lost in the previous two months. Seventy-four per cent. of all tonnage lost in 1991 was more than 15 years old, and the world fleet is growing and aging rapidly.
Many flags with good safety records are losing vessels to flags with poorer safety records. Statistics derived from port state controls show a ratio of deficiencies over inspections of almost 79 per cent. of the worst flags compared with 12 per cent. for the best. The average age of flag of convenience ships is 17 years.
The people of Britain, especially those of Shetland and Scotland, are looking for immediate action to protect them. I suggest an amendment to the memorandum on port state control and the public right to know. My proposals are: first, the explicit concentration of inspections of ships flying flags of convenience and, secondly, full publication of all inspections, including those requested by the crew or maritime trade unions.
At present, inspections are carried out at random and few are undertaken. The results of such inspections are secret. The captain of the ship and the flag of convenience country get a copy of the results. The Minister of Transport keeps a copy, but it is confidential. No one else knows the results of such inspections. Australia has a black list of ships of that nature, and the system is working. That is one aspect which I should like to envisage in my Bill.
Thirdly, there should be an extension of inspections to operations in piloted waters with specific emphasis on the competence and efficiency of the officers and crew and the ability to understand and converse with each other. That proposal comes from a recommendation in a House of Lords inquiry in the past. Fourthly, the restrictions to reinspect within six months should be removed; and, fifthly, all foreign flag ships entering a Paris memorandum port for the first time should be inspected. Through the

European Community and the International Maritime Organisation, there would be a similar extension of port state inspections to all other countries.
I understand the complexities of maritime law. I see no reason why the Government should disagree with my Bill. I cannot possibly include in my Bill the proposal to route tankers and ships from critical zones in and around, for example, the Minch and other ports of Scotland such as St. Kilda because of a restriction of time and space.
The Minister and the Government have had 13 years. The Minister of Transport was president of the Transport Committee in Europe for a year. I shall quote a statement made by the Minister in the House on 11 January on the MV Braer:
The hon. Gentleman asked about the salvage operations convention. We hope to be able to ratify it as soon as we can find a legislative opportunity; it requires primary legislation."—[Official Report, 11 January 1993; Vol. 216, c. 613.]
My hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) wrote asking that the international convention on salvage operations be incorporated in my ten-minute Bill and has had no reply. The offer still stands.
Part of the agreement of the international convention is a proposal that, if a ship is in trouble at sea and a tug appears to give assistance, the line must be taken aboard immediately. At present, the skipper must confer with the owners and valuable time is wasted. He may even refuse to take the line on board. If we endorsed the convention, such ships could be saved, lives could be saved and both the salvage and rescue workers could be protected. Other nations have endorsed such an arrangement. We should endorse the convention immediately, and I am willing once again to allow the Government to use my Bill to ratify and adhere to the principles and directives contained in the document entitled "International Convention on Salvage 1989".
The proposal is common sense. A new ship can break down and drift helplessly in a stormy sea. Delays in notifying the territorial maritime authorities and refusals of help must be stopped. If ships are in our territorial waters, the captains and owners must adhere to the directive. The quicker the Bill is accepted, the better.
If the result of my Bill means clearing the seas of potential disasters called ships of covenience, so be it. If it means that freight rates increase, so be it. If it means a scrap and build policy giving orders to British shipyards, so be it. If more ship owners continue to fly the red ensign, so be it. If we save the lives of seamen, sea women and, obviously, passengers, flora and fauna and seals and otters and the livelihood of the fishing communities in Scotland and elsewhere, so be it. If the Bill gives the people of this nation access to information about what is going on at sea, so be it.
Above all, if the Bill brings benefits out of disaster and leaves my grandson and others like him with a sea and seashore environment that is guaranteed safer, it will have all been worth while. I hope that the House will support my Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. Eric Clarke, Ms. Joan Walley, Mr. Don Dixon, Mr. Calum McDonald, Mr. Eddie Loyden, Dr. Norman A. Godman, Mr. Andrew Mackinlay, Mr. David Jamieson, Mr. Donald Anderson, Mr. Bill Etherington, Mr. Alan Meale and Mr. Ian Davidson.

MARITIME SAFETY

Mr. Eric Clarke accordingly presented a Bill to make further provision regarding maritime safety; to regulate shipping flying flags of convenience; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 19 February, and to be printed. [Bill 124.]

Orders of the Day — Railways Bill

Order for Second Reading read.

[Relevant documents: The First Report from the Transport Committee, The Future of the Railways in the Light of the Government's White Paper Proposals: Interim Report, HC (1992–93) 375, and the Minutes of Evidence taken before the Transport Committee, HC ( 1992–93 ) 246 i-xxi.]

Madam Speaker: Before I call the Secretary of State, I should tell the House that I have had to impose a 10-minute limit on speeches between the hours of 6 pm and 8 pm. I should be much obliged if those hon. Members who speak outside those times exercised voluntary restraint—as I appreciate they have in recent times—so that other hon. Members may be called.

The Secretary of State for Transport (Mr. John MacGregor): I beg to move, That the Bill be now read a Second time.
British Rail has improved considerably in recent years in many of its services. But most people agree that there is still much room for further improvement. The Bill will make possible an historic change for the better in Britain's railway system. In moving its Second Reading, I propose to reaffirm the objectives of our policy; to announce further major decisions affecting the railways; to explain how the Bill will enable the necessary changes to take place; and to deal with some of the key issues that have been raised since we launched the White Paper last July.
We begin with a railways regime not fundamentally changed since nationalisation in 1948. It is not in the interests of customers—or of management and staff—to persist with that regime. As an organisation, BR combines the classic shortcomings of the traditional nationalised industry. It is an entrenched monopoly. That means too little responsiveness to customers' needs, whether passenger or freight; no real competition; and too little diversity and innovation. Inevitably, it also has the culture of a nationalised industry: a heavily bureaucratic structure; an insufficiently sharp awareness on the part of employees that their success depends on satisfying the customer—indeed, on attracting more customers; and an instinctive tendency to ask for more taxpayers' subsidy and to feel that public subsidy will always be there as a crutch whenever things look difficult. Inevitably public ownership also brings with it the constraints of public finance, not least given the many competing demands on the public purse.

Mr. Barry Jones: Will the right hon. Gentleman give way?

Mr. MacGregor: I have hardly begun; I shall give way in due course.
All this shows up in public dissatisfaction with the railways. As I said, there have been many improvements in BR in recent years. The organisational changes that the present chairman, Sir Bob Reid, and his board have been bringing in are major steps forward. Many employees do a splendid job within the confines of a monopolistic


nationalised industry, showing much dedication and skill. A recent example was the way in which those in ScotRail kept the trains running during appalling weather in recent weeks. I should like to pay a particular tribute to Tommy Robertson who, in the foulest of weathers, and after already very long hours, discovered in the middle of the night that the bridge at Forteviot had been badly damaged. His vigilance and dedication deserve the highest praise.
I repeat, however, that those who work in BR and the system have been constrained by the nationalised industry form of organisation, which has now been found wanting for all the other industries that we have privatised. The railways and their customers will benefit as much as other industries from a change in the culture and the system under which they have to operate.
We therefore aim to create a new regime for the railways. Our objective is to improve services for passengers and freight customers, while maintaining high safety standards and other necessary safeguards, including a commitment to the provision of subsidy to maintain loss-making but socially necessary passenger services, such as commuter lines and rural services.
I see at least three advantages in getting as much private-sector involvement, attitudes, objectives and management into our railway system as we possibly can. First, there is the big issue of the change of culture. I have been struck by the reaction I keep getting from those who worked in former nationalised industries and who now operate, in a range of industries, in the private sector. Time and again, it is the galvanising effect on their attitudes that they highlight—the transformation in work practices and approaches that occurs when they realise that their success depends on always putting customer requirements first.
This is a fundamentally important point, which is stressed by many people. Always putting customer requirements first is a change that we need in British Rail. I was struck by the fact that, just after we published the Bill, no fewer than five of the many newspaper editorials that support our proposals highlighted this aspect. Secondly, what we are doing will help to create more competition and choice. Thirdly, it will enable private-sector capital to supplement the existing sources of British Rail finance.

Mr. Barry Jones: Has the Secretary of State had representations from former employees of British Rail about concessionary travel? Can he give the House a commitment in respect of this matter?

Mr. MacGregor: We have often made it clear that concessionary travel arrangements will continue. Indeed, hundreds and hundreds of letters on that very point have been sent out. The same applies to pensions, with which I shall deal later.

Several hon. Members: rose—

Mr. MacGregor: I have a great deal to say, so I must get on.
We shall achieve our objectives by a structure with the following key elements. They were first set out in the White Paper, but it is worth restating them today.
First, British Rail's freight and parcels services will be sold to the private sector, and there will be open access for new operators. I have noticed that there has not been quite the same concentration on freight services as on passenger

services. They are very important, so I want to deal with them. Freight services will be provided competitively, with no monopoly for any operator. I am in no doubt that this is what freight customers and potential operators want, and that breaking British Rail's monopoly is crucial if we are to succeed in getting more freight back on to the rails. We should be quite clear about the fact that this is a challenging target.
However, I have talked to many existing and potential customers, as well as operators—for example, at a conference a few weeks ago attended by well over 300 people—and they all sing the same tune. They are saying, in print and, everywhere they go, verbally, that this is the right way to reverse the decline in rail freight, to attract more freight from the roads.

Mr. George Foulkes: How can the Secretary of State say that he has not heard us talk about freight?

Madam Speaker: Order. The Secretary of State was giving way to the hon. Member for Carshalton and Wallington (Mr. Forman).

Mr. Nigel Forman: Many Conservative Members warmly support the broad arguments that my right hon. Friend is adducing in favour of the Bill, and wish him well in his long-term project, but I have to ask him whether he is aware that the majority of my rail-travelling constituents and, I suspect, many of those of my hon. Friends will apply three tests to this legislation.
They will ask, first, whether it will make the trains more reliable; secondly, whether it will improve the infrastructure of tracks, rolling stock and signals; and thirdly, whether it will deal with the problem, which is very acute in the short-haul commuter services, of the non-availability, at critical times, of drivers and guards. If my right hon. Friend can satisfy us on those points, we shall be very pleased.

Mr. MacGregor: The answer to all three questions is yes—[Interruption.]—and I pick up the final point, in view of some comments that have been made in the press. Because of previous practices in British Rail in the way in which people were eligible to become drivers, BR currently has a considerable proportion of drivers over the age of 55, so there is quite a long retirement queue coming up shortly. That is a problem because of previous employee relations practices, with BR not recruiting enough drivers. Our proposals, by encouraging franchisees to come on to line, will undoubtedly help with that problem.

Several hon. Members: rose—

Mr. MacGregor: I must get on, because I have a great deal to say.

Mr. Foulkes: Will the right hon. Gentleman give way?

Mr. MacGregor: I keep hearing the hon. Gentleman from a sedentary position.

Several hon. Members: rose—

Madam Speaker: Order. The Secretary of State is clearly not giving way, at any rate for the moment.

Mr. MacGregor: Secondly, existing passenger services will be franchised to the private sector. Franchising allows subsidy to be paid if subsidy is needed. So it solves the


dilemma of how to introduce private sector management and private sector capital into loss-making services provided for social reasons. Franchising also allows the public interest in particular passenger services to be protected through contract conditions imposed by the franchising director.

Several hon. Members: rose—

Mr. MacGregor: I warn the House that, were I to give way to all hon. Members who wish to intervene, I would make an extremely long speech, and I am mindful of what Madam Speaker said. In any event, I must finish the passage which I have begun.
We envisage that the franchising director will begin his specification of services from the basis of the present timetable—[Interruption.] I am making some important points, which I am anxious to get over. He will also be able in appropriate circumstances to impose conditions on fares and services as part of the franchise contract. Such safeguards are made possible by, and are one of the major advantages of, the system that we are proposing.
The third key element of the new structure is that responsibility for track will generally be split from responsibility for operating trains. A new public sector organisation called Railtrack will be responsible for track. That split has a number of advantages, on which I will expand later. Railtrack will be required to contract out as many of its services as it reasonably can. That, too, is a vital point and is laid down in the Bill. It will be vital in improving its efficiency and thus keeping its prices down.
The fourth element in our proposals is new arrangements to allow access to the track for passenger and freight operators. That will be supervised by the independent rail regulator, who has among his responsibilities that of promoting competition and ensuring fair play, and of promoting the interests of consumers and ensuring that network benefits are maintained. I have announced that, subject to Parliament approving the enabling legislation, I intend to appoint John Swift QC as the regulator.

Mr. David Harris: I am grateful to my right hon. Friend for the assurances that he has given me in writing about safeguarding existing passenger services, and obviously I have a particular interest in the line from Plymouth to Penzance and the maintenance of through services. Will my right hon. Friend make it clear that he as Secretary of State and his successors will have a power of direction over the director of franchising to consider in certain circumstances putting out the whole of an existing service for franchising, rather than allowing people to pick off just the bits of a service that they want to franchise?

Mr. MacGregor: I have made that clear to my hon. Friend and, as I said, we expect the franchises—indeed, it will be the case—to be on the basis of the present timetable. I hope that gives my hon. Friend the assurance for the future that he seeks.
So the fundamentals of the policy are exactly as set out in the White Paper of last July. We believe that that is the best way to get as full private sector involvement and approaches as possible. A conventional flotation, with the railways as a whole in the public sector one day and in the private sector the next, is not possible. [HON. MEMBERS:

"Why?"] I will explain why. Outright privatisation of all the railway is not on the agenda for the foreseeable future, not least because subsidy from the taxpayer is needed, and we have made it clear that we shall continue to provide that. So the principles and main structure of the Bill are entirely consistent—

Several hon. Members: rose—

Mr. MacGregor: I must make more progress.
The principles and main structure of the Bill are entirely consistent with the White Paper, because we believe it to have struck the right balance. Nothing I have seen in the comments since it was published has convinced me otherwise, but on the detailed development of the policy we have been consulting carefully and taking seriously the representations we have received.
We have issued a range of important consultation and other documents, as we have developed the details of the proposals. Documents on franchising, on safety, on pensions, on rolling stock procurement, on the British Transport police, and on consumer representations have all been published.
I shall shortly be issuing a detailed technical document on the access and charging regime, and today I will annouce the general principles on which it will be based. I aim to issue by the end of March a document on the restructuring of the freight business for privatisation. There will also be a number of detailed documents put before the Standing Committee to deal with the various issues in the Bill. We shall continue to take account of the representations which we receive on these detailed elements of the policy.

Mr. Robert Hughes: I have almost forgotten my point, but the Secretary of State began by extolling the virtues of the change of climate in which the railways will become private. If that is so, why will the change of culture affect only those who are franchisees and not those who still run track?

Mr. MacGregor: I am inclined to think that the hon. Member could not have thought it was a very good point, since he seems to have forgotten what it was. It was not a particularly good point. The change in culture will come about, not only by private sector companies coming in, not only from the fact that a considerable number of British Rail managers are keen to engage in management buy-outs and are well aware of the change in culture that that could bring about, but also through the proposals we have for RailTrack. The main design and objective is to achieve that, in the interests of passengers.

Several hon. Members: rose—

Mr. MacGregor: I will give way once more.

Mr. David Howell: I am wholly in favour of my right hon. Friend's aims to change the culture and to harness private enterprise, with all its vigour, to public purposes. He must be right in the way forward he is going, but when it comes to the commuter services—I think particularly of Network SouthEast—he must recognise that we are looking not merely for improved services but for an entirely new and modernised infrastructure for the 21st century to provide a wholly new, enhanced and dedicated transport service for the area. This will require vast investment funds. Will my right hon. Friend assure us


that his new plans will open the way for mobilising those funds on a far bigger scale than anything we have been able to achieve under the present regime?

Mr. MacGregor: I was intending to come on to that later, but I am grateful to my right hon. Friend for his support and his understanding of what we are doing. We have record levels of investment going into British Rail at present, certainly the highest—[Interruption.] I am replying to my right hon. Friend—levels are the highest since 30 years ago. I believe, and I shall be elaborating this later if I have time, that our proposals also offer, in addition to present methods of Government support and the possibilities of investment through revenue, more private capital to come in and supplement the revenue coming in for the first time. Although inevitably it will take some time, I believe that. over the period, we shall see a considerable increase in the investment going into the railway system.
As so many people wish to speak, I think I should now get on, as I have some important announcements to make and I have given way a great deal. Some of the points that have been raised I am dealing with.
We have very deliberately proceeded in this way. First, we set out the main policy in the White Paper six months ago, subsequently filling out the detail as we went along. That will continue. It would have been wrong to inflexibly pin down every element in advance of parliamentary scrutiny of the Bill and in advance of implementation by BR, the franchising director and the independent regulator, who need and will have important elements of discretion.
I turn now to a number of announcements that I wish to make today. First, on Railtrack, in the White Paper, we said:
… The Government believes that track and train operations should be separated at an early stage and that a new track authority—Railtrack—should be established initially within BR with responsibility only for track and associated infrastructure".
The separation of track from operations is a key element in our policy. Since the White Paper, we have been reflecting on this further, taking into account a wide range of comments—I am mindful, for example, of the speech of my hon. Friend the Member for Harwich (Mr. Sproat) in the debate on the White Paper in October. We have now decided that BR ownership of Railtrack is no longer necessary or desirable.
It is important for all passenger franchisees and freight operators to know from the outset that Railtrack will be a truly independent, commercially driven body, and that there will not be any possibility of a conflict of interest involved in its remaining in the ownership of a body which also operates trains. That means that it must be fully independent of BR. I intend therefore that Railtrack will be separated from BR and made a Government-owned company in April 1994, and that preparations should begin now.
The chairman-designate of Railtrack will be Mr. Robert Horton, whom I recently appointed as vice chairman of the British Railways Board. Mr. Horton will have principal responsibility for taking forward the creation of Railtrack as a Government-owned company. He will work closely with the chairman and board of BR. BR will retain full operational responsibility until April 1994.

Mr. Foulkes: On a point of order, Mr. Deputy Speaker. The Secretary of State said that preparations are beginning now. He and his Department are undertaking actions now in anticipation of the Bill being enacted. We are debating the Bill on Second Reading. It is important that you make it clear to the House exactly what the position is in relation to the Secretary of State and his Department taking actions which anticipate the Bill.
We have far too much of that from this arrogant Government. It is about time that they had some respect for Parliament and waited until Parliament had scrutinised the Bill and until it became an Act of Parliament before carrying it out. Will you give a ruling that the Secretary of State must not undertake the expenditure of money or take action until the Bill becomes law?

Mr. Deputy Speaker (Mr. Michael Morris): The hon. Gentleman has made his point forcefully, but it is a matter for the Government, and the Government know the rules.

Mr. MacGregor: The hon. Gentleman made his point at great length, and I shall reply to him very briefly. Of course I have respect for Parliament, which is precisely why I did not introduce the Railways Bill until the paving Bill had achieved Royal Assent from both Houses. The hon. Gentleman is asleep. That Bill enables British Rail to spend money in preparation for privatisation. We waited until we had parliamentary authority before we did it.
I wish to announce the first groups of services which I am asking British Rail to reorganise and prepare for transfer to private sector operators under our franchising proposals, and I could not do that without the paving Bill. My right hon. Friends the Secretaries of State for Scotland and for Wales have been consulted throughout.
The groups of services will be: the InterCity east coast main line; the InterCity Great Western main line to south Wales and the south-west; ScotRail; the London, Tilbury and Southend line; the south-west division of Network SouthEast; the Victoria-Gatwick express; and the Isle of Wight line.

Mr. Barry Sheerman: The Isle of Wight!

Mr. MacGregor: That is exactly the kind of sedentary intervention I like to hear.
We cannot establish the real franchises—

Mr. Alex Salmond: On a point of order, Mr. Deputy Speaker. There is a lot of noise in the Chamber. I thought that I heard the Secretary of State say that the east coast main line has been franchised, but I did not hear him clarify whether that franchise extends to Aberdeen or stops at Edinburgh. Can you, through your good offices, ask him to repeat that?

Mr. Deputy Speaker: No doubt so that the hon. Gentleman can intervene, and if the Secretary of State gives way, all well and good.

Mr. MacGregor: That is a cunning way of asking a question, but I shall answer it briefly. Of course it extends to Aberdeen.
We cannot establish the real franchises until we have the parliamentary authority and have set up the franchising director, who will be responsible for negotiating the contracts. The precise nature of those will be dependent on the response to the tenders— [Interruption.] The hon. Member for Banff and Buchan


(Mr. Salmond) complained about noise, but he is making more noise in the Chamber than anyone else. I should be grateful if he would allow my hon. Friends to hear me.
It is important to organise potential franchises in an operational form now so that we can gain experience of the restructuring, management and accountancy issues and have the broad structure of some franchises ready for an early start.
It is the intention that all British Rail's passenger services will be franchised in time.

Several hon. Members: rose—

Mr. MacGregor: The time for hon. Members to raise matters is during their speeches. My hon. Friend the Minister will reply in his winding-up speech.
Selecting the franchises and determining the pace of franchising must—

Mr. George Walden: Will my right hon. Friend give way?

Mr. MacGregor: I shall give way one more time.

Mr. Walden: I am grateful to my right hon. Friend. Is he aware that people who are not normally opposed to privatisation are sceptical about this privatisation? They are saying that anyone can run a line, but that what we need is someone to run the railway.

Mr. MacGregor: Yes, and I envisage that, by having a number of people operating the railways and getting the private sector in, the railways will be better run. I notice that more and more people are saying the same thing. Indeed, the vast majority of editorials that have commented on the Bill have said precisely the same thing.
Selecting the franchises and determining the pace of franchising must take account of the further views of the private sector. That is important, because we want to ensure that there will be competition for the franchise units to achieve value for money. We shall also continue to take account of users' representations and the views of others, including Members of this House.
In the light of those views, I shall publish a complete map of franchises within the next few months, although even then it will be desirable to preserve flexibility for the franchising director, when he undertakes the real process of negotiating franchise applications in response to tenders after Royal Assent.

Mr. John Home Robertson: rose—

Mr. MacGregor: I have made it clear that I shall not give way, as I have already done so a great deal for Opposition Members and I have made my position clear.

Mrs. Margaret Ewing: On a point of order, Mr. Deputy Speaker. The Secretary of State has said that he expects Members to mention detailed matters in their speeches, but given that our speeches will be set against the background of his announcements, we seek clarification. For example, it would be helpful if the Secretary of State, when referring to the east coast line, could say whether he includes Inverness in that line.

Mr. Deputy Speaker: The Secretary of State will have heard the hon. Lady.

Mr. MacGregor: There will be many months in which to go through the further details of all the issues in my announcement today before they become operational. There must be limits to what I give way on this speech—[Hon. Members: "Answer the question."] The answer to the hon. Lady's question is yes.
In the light of those views, I shall publish a complete map of franchises within the next few months.

Mr. Home Robertson: On a point of order, Mr. Deputy Speaker—as that seems to be the only way to be heard.

Mr. Deputy Speaker: Order. That is not a point of order.

Mr. MacGregor: It is perfectly clear what the hon. Member for East Lothian (Mr. Home Robertson) was up to. I certainly would not wish to answer his point of order.

Several hon. Members: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. It is no good hon. Members saying that they have points of order when they are not genuine points for me. The rules of debate are clear.

Mr. Foulkes: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I hope that it is a genuine point of order.

Mr. Foulkes: Yes, it relates to my earlier point of order. The Secretary of State for Transport has said that there will be some months to discuss the details, yet in reply to my earlier point of order he said that he can make irrevocable decisions because of the paving Bill. The decisions will therefore have been made and implemented, and the House will not have had an opportunity to discuss them fully.

Mr. Deputy Speaker: That is not a point of order; it is a point of argument.

Mr. MacGregor: Not only is it not a point of order, Mr. Deputy Speaker, but it is wrong again, because the hon. Gentleman has not listened to what I said—that there would be no real franchise until we had got the Bill through Parliament. So there cannot be a real franchise based on any of these until the Bill has gone through Parliament.
If there are any more of these points of order, Mr. Deputy Speaker, it will make my speech a very long one. I do not think that it is in the interests of others who wish to speak.
I was saying that I would put forward in the next few months a complete map of franchises, although even then it will be desirable to preserve flexibility for the franchising director when he comes to undertake the real process of negotiating franchise applications in response to tenders after Royal Assent. Private sector bidders, however, will wish to see some operational running in shadow form before making bids, and my announcement today enables that process to start.

Mr. Robert Adley: rose—

Mr. MacGregor: No, I would like to get on. I have given way to my hon. Friend a very great deal, and I want to complete this speech. [Interruption.] I will give way, but I must make it clear that this is the last time.

Mr. Adley: My right hon. Friend has announced six franchises. Can he say whether it will be within his policy to agree that these six, or seven, franchises can be operable as vertical franchises, if that is what the private sector wants?

Mr. MacGregor: I am coming to that point now. I was about to say that one issue which has surfaced in public debate is that of vertical integration—the management and control of both track and trains by the same body—as against horizontal integration—separating the track authority from the operators. We concluded, and we made it clear in our election manifesto, that full vertical integration was neither practical nor desirable across the great bulk of the railway network. That is why we propose Railtrack as the national infrastructure authority. I want to deal with this because it is a very important point—I agree with my hon. Friend on that—and it is important to set out the arguments.
We decided not to pursue the alternative of a complete system of vertically integrated franchises, for a number of reasons. First, operators who run both the track and the trains would inevitably face a conflict of interest when others applied to run services on their line. We want to give everyone, including freight operators, a fair crack of the whip—they regard this as very important—but we could do it on vertically integrated lines only if we adopted intrusive regulation to ensure fair treatment for all.
Secondly, one of our key priorities is to secure suitable levels of investment in rail infrastructure. Investment on that scale requires a strategic view of the kind that only Railtrack can provide. Railtrack will focus infrastructure investment on the parts of the network where it is most needed. It would be unrealistic to expect individual franchisees to do the same. There could be a problem for individual franchisees in meeting the capital investment requirements in particular franchise areas.
Thirdly, Railtrack will have the key role in ensuring the safety aspects of track and signalling. The existence of a national track authority will ensure that safety standards and procedures are co-ordinated across the track in a clear and systematic way—a point that was of particular importance to the Health and Safety Commission in its consideration of our proposals. It would be much more difficult to achieve that if track responsibilities were spread across a large number of local operators.
Fourthly, we need a national track authority to ensure that operational timetabling is co-ordinated efficiently across the whole of the network.
Those are compelling reasons which led us to decide not to hand the whole railway, lock, stock and barrel, to local franchise operators. However, in a limited number of cases, particular features may suggest that it is right to make an exception and to allow a degree of vertical integration. I have decided, for example, that the Isle of Wight can be offered as a vertically integrated franchise —[HON. MEMBERS: "Hear, hear."l—as it is completely separate from the rest of the network.
I recently announced that, subject to parliamentary approval of the enabling legislation, I intended to appoint Mr. Roger Salmon as the first franchising director. Meanwhile, Mr. Salmon will act as my special adviser on franchising and will therefore play an important part in the development of our approach to franchising in this transitional period.

Mr. John McFall: rose—

Mr. MacGregor: No, I will not give way again. I have made that clear.
My third major announcement today concerns rail freight. Everyone agrees that carrying freight by rail usually offers environmental advantages as compared with using lorries. But translating that sentiment into practice is another matter. Rail freight has suffered from reductions in demand for the type of traffic for which it is best suited—heavy freight: aggregates, steel, oil and coal. In the fast-growing areas of consumer goods, new distribution and retailing patterns—just-in-time concepts, for example—are right for the consumer and for the marketplace but they are not easy for a monolithic industry to respond to. Under BR ownership, rail freight has not been as efficient or as responsive to that market as it should have been.
I am convinced that our policies offer the best prospects for halting the decline in freight by rail and seeing more freight switched from road to rail. By privatising existing freight operations, ending BR's monopoly and opening up the rail network to as many private sector operators as wish to make use of it, I intend to assist this process by introducing three new measures.
First, we will enhance the existing freight facilities grants scheme. The scheme provides targeted financial assistance to capital projects which demonstrably help the environment by switching traffic from road to rail or to inland waterways. I propose to expand the scheme in three ways. Grants will be made available to private rail freight operators as well as customers and consignors; grant will cover all forms of capital expenditure and equipment, including locomotives and track and structures specifically needed for freight; and grant assessments will now include traffic taken off inter-urban main roads and motorways. [HON. MEMBERS: "Nice little handout."] It is very significant, that derisory comment from hon. Opposition Members. The fact of the matter is that these enhancements will broaden the scope of this successful scheme and, I believe, will be widely welcomed by the industry and by all those concerned about the environment.
Secondly, I propose to issue a consultation document containing proposals to encourage combined transport movements, and to help keep down the number of lorries on our roads, but allowing lorries carrying goods in containers or swapbodies, to and from railheads only, to operate at up to 44 tonnes gross weight on six axles, provided they are specially equipped with road-friendly suspension and axle layout. That will give rail a competitive edge. It will be particularly important for the development of channel tunnel freight services.
My third proposal involves a new principle. I remind the House that all forms of subsidy to the freight railway ceased under the last Labour Government in 1977. That was based on the belief that rail freight should operate as a commercial business, and fundamentally that is right. But financial support can be justified where there are unambiguous wider benefits.
I therefore propose to introduce a new grant, up to 100 per cent. of the track charges if necessary, to contribute towards track charges for freight traffic which can be demonstrably proven otherwise to move from rail to road, or could not be attracted to rail without it. This even


means that, where the environmental and other benefits can clearly justify it, access to the network can be made free at the point of use for freight operators.
I must stress that the Government will expect to see clear returns for their money by way of these environmental benefits, and that the grant will be available only up to the limit of the track charges levied by Railtrack.

Sir David Mitchell: rose—

Mr. MacGregor: The combination of our proposals for privatising rail freight, the introduction of open access to the network, the opening of the channel tunnel and the measures that I have announced today amounts to a major new opportunity for freight on rail. It demonstrates our determination to get the freight railway back on its feet.

Mr. McFall: rose—

Mr. John McAllion: rose

Mr. MacGregor: It demonstrates our determination to get the freight railway back on its feet.
I give way to my hon. Friend.

Sir David Mitchell: I am most grateful to my right hon. Friend for giving way. Can he say whether he will take steps to ensure that open access to freight is brought in under his existing powers before the Bill becomes law?

Mr. MacGregor: I fear that I do not have the powers to do exactly what my hon. Friend suggests, nor can we introduce these measures until we have the Royal Assent. So I very much hope that we will get the Royal Assent as quickly as possible.

Mr. McFall: rose—

Mr. McAllion: rose

Mr. MacGregor: I want to turn to a very important point now, which I know concerns a lot of hon. Members and which has already been raised—the access regime for rail operators. I will be publishing a separate detailed document on this before the relevant debates during the Committee stage of the Bill. Access arrangements are central to the private sector operation of trains. There are two key issues: how operators will be able to get paths, and the basis of the charges they will pay. We also need a system which is simple for operators, which facilitates franchising and encourages rail freight, and which gives the right economic signals. This includes generating revenue for Railtrack sufficient to cover its costs and enable it to invest.
The independent regulator will be responsible for approving access agreements, and under the Bill he will have duties to protect users and encourage competition. All access arrangements will be subject to Community law. Within this framework, the Government see the system operating as follows.
Freight operators should agree paths and prices with Railtrack on a commercial, freely negotiated basis. It is particularly important for Railtrack to be able to charge market-based prices to freight operators, because it needs income to cover the common costs of the track—those which cannot be attributed to individual operators. Operators can afford to make different contributions to

those common costs. If prices were based on average costs, marginal freight operators would be driven away. Conversely, if all prices covered only marginal costs, Railtrack would never cover its common costs.
The system we propose offers the best chance of keeping marginal freight traffic on the railway, and of allowing Railtrack to cover its costs. The alternative of posted prices, whether average or marginal, fails on those counts. The new scheme that I have announced today for assisting rail freight operators with track costs will also help the most marginal flows. The regulator will supervise the system to ensure that Railtrack does not abuse any monopoly power or unfairly discriminate.
A different regime is needed for franchised passenger services. Our longer-term aim is to adopt a market-based system of access for those services too, with increasing competition as the market develops. But for the first generation of franchises, the necessary trainpaths for franchises will be secured from Railtrack by the franchising director, acting under the guidance of the Secretary of State. Those trainpaths will then be offered to potential franchisees as part and parcel of the invitation to tender for franchises.
The price that Railtrack will receive for franchise train paths will be agreed with the franchising director according to economic principles developed by our advisers, Coopers and Lybrand. Those will be set out in the detailed document that we shall be publishing. [HON. MEMBERS: "When?"] I have already said that it will be published soon—in advance of discussion in Committee—I hope, early next week.
The prices for franchised trainpaths will be guaranteed by the franchising director—[Interruption.] I am covering an important part of the proposals, which I am sure many people will wish to study.

Mr. John Prescott: We are discussing an important issue. Many people have demanded information on the criteria to be used for track costs. Am I to understand from what the Secretary of State is saying that the report is ready, in his hands, and will be published before the Committee meets, which is likely to be next Tuesday—within days of today's debate? Why could not the Secretary of State produce the report in time for today's debate?

Mr. MacGregor: We have produced a great deal for today's debate—[HON. MEMBERS: "Answer the question."] I am outlining the principles in my speech now. We shall have the detailed document ready. We are moving as fast as we can, and hope to have it published and ready next week.
The task of bidders will be greatly simplified, as they will have only one bid to make, for the franchise. Therefore, if bidders cannot afford the access price, it will be subsidised by the franchising director.
The proposals give priority at the outset to franchises. I make no apology for that. If we are to change the culture, which I have stressed throughout is vital, it will be through introducing private sector disciplines or attitudes into as many passenger services as possible. That means not just a few indvidual services on particular lines—although I do not wish to underestimate the importance of such competition where possible—but introducing disciplines into whole franchised sectors. If competition has to be moderated in the early stages to achieve the successful


launch of franchising, some exclusivity may be necessary. On some crowded lines, there may also be technical reasons for doing so initially.
Finally, I should explain the significance of Railtrack's financial objectives for the access arrangements.

Mr. McAllion: On a point of order, Mr. Deputy Speaker. The Secretary of State has made a number of important announcements this afternoon that would normally form the basis of a ministerial statement, which would have allowed many Opposition Members to ask questions. He has effectively hidden his announcement in his speech on Second Reading and refused to give way to Opposition Members who have tried to raise important constituency issues. Is that not an abuse of the orders and procedures of the House designed to protect Back Benchers?

Mr. Deputy Speaker: This is a Second Reading debate, in which the Secretary of State chooses what he wishes to speak about.

Mr. MacGregor: The hon. Member for Dundee, East (Mr. McAllion) made a ludicrous charge. I have been—

Mr. McFall: On a point of order, Mr. Deputy Speaker. I have been present since the beginning of the debate, and have been trying to intervene. The Secretary of State has three times said that he was taking his last intervention. I wish to pose questions on the issue of ScotRail. Do we have to occupy Conservative Benches before the Secretary of State will give way to us?

Mr. Deputy Speaker: The Secretary of State gives way to whom he chooses.

Mr. Barry Field: On a point of order, Mr. Deputy Speaker. Did not the Secretary of State mention my constituency not once but three times in the debate? I am the only representative of that constituency in the House, and I am not complaining at all about the fact that my right hon. Friend did not give way to me.

Mr. Deputy Speaker: That was not a point of order—I heard some cheers earlier on.

Mr. MacGregor: This is unlike a statement: we have made announcements in several debates and documents of our policy on this important issue, and shall continue to do so. We are today debating the Bill's Second Reading. The Bill will go into Committee and there will be many months in which to consider all the aspects. I am mindful of the need to get on so that other hon. Members may speak.
I should explain the significance of Railtrack's financial objectives for the access arrangements. We have deliberately chosen to provide subsidy to operators, not to Railtrack. That is because subsidy is best directed at its intended purpose—the continued provision of socially necessary passenger services which might otherwise disappear.
Therefore, Railtrack will operate on commercial lines, making an appropriate rate of return, which the Government will fix nearer the time that Railtrack goes live. But franchisees will have to pay only the track charges that they can afford. The proposals for charges for freight operators are specifically designed to maintain flexibility to protect marginal operators while charging more to those who can afford it.
Many people talk about level playing fields—it is a big debate. The House will recall that, last autumn, I announced that later this year I would produce a Green Paper on road user charging. The principle of that is that the costs of infrastructure should be covered by users. Therefore, one other element of the policy will be the Green Paper on road user charging.
Before I turn to the Bill's main provisions, I shall say a word about the ticketing and other facilities that will be available to rail passengers under our proposals. We believe that the injection of private sector marketing skills will increase the range of flexibility of the benefits on offer. Private operators will have the freedom and incentive to get more customers on to the railway, which will mean giving passengers convenient and flexible ticketing arrangements. It will also mean offering discounts to boost patronage on certain services and ensuring that all relevant information about services is available to the public. With the private sector in the lead, we expect that most network benefits will be promoted, either individually or collectively, by the operators, but fallbacks will be available.
The Bill will give general powers to the regulator and the franchising director to ensure that key network benefits are maintained. For example, we shall require through ticketing to be provided at all major ticket offices.

Mr. Bob Cryer: Only major ones?

Mr. MacGregor: Through ticketing is not provided at all ticket offices at present, which shows how ignorant the hon. Gentleman is.
We shall guarantee the publication of a national timetable. No less important, we shall require franchisees, as part of their contract, to provide common discount facilities for the disabled. I am sure that that commitment will be welcomed on both sides of the House.

Mr. Brian Wilson: I am grateful to the Secretary of State for giving way, and I am sure that his answer to my question will be listened to with great interest by people both inside and outside the House. Will the right hon. Gentleman take this opportunity to guarantee the continuation of a national network railcard for the elderly and for young people?

Mr. MacGregor: I have made the position clear on the disabled. There is no statutory obligation on British Rail to provide the railcard at present, and we do not propose to change the system. However, I have made it clear that I believe that it will be in the interests of franchisees to offer such facilities.
I shall turn now to the Bill's main provisions. Part I covers the provision of railway services under the new regime. It deals broadly with licensing, franchising and access, and the organisations to be set up to make those possible and effective.
Clause 1 and schedule 1 empower the Secretary of State to appoint the regulator and the franchising director. Other clauses impose duties on those office holders. The present consumer organisations need to be updated to play a similar role in the new railway. Clauses 2 and 3 achieve that, and various other aspects of clause 1—which I shall not go into in detail now, due to the pressure of time—cover licensing, franchising and access aspects.
Clauses 35 to 44 cover the important closure procedures. The existing procedures have to be amended to fit the new circumstances of the railway. They have not been weakened.
The remainder of part I contains a wide range of other measures needed to underpin the provision of railway services in the new regime.

Mr. McAllion: rose—

Mr. MacGregor: Part II provides for the restructuring of BR. There is a crucial point here, because immediate and uninformed comment—including, typically, from the Opposition—suggested that we were taking covert powers to privatise London Underground among the transport undertakings. That is wholly wrong. It is this part of the Bill which covers privatisation as such. It does not apply to London Transport or any undertaking other than BR. The Bill gives no power to privatise London Underground.
Part II makes it possible for companies to be formed out of BR. Those companies will form the basis of key players in the future railway. Thus the freight businesses to be sold to the private sector will first be formed as companies, as will the passenger franchise units. Railtrack will also be created as such a company and transferred to the direct ownership of the Government under those powers.
Clause 82 contains a particularly important provision. It confirms, for the avoidance of doubt, that the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply to transfer schemes under clause 75. That will make employees' rights clear in respect of every transfer.
Part III contains a number of miscellaneous, general and supplemental provisions, some of which are of great importance. Clause 107 applies part I of the Health and Safety at Work etc. Act 1974 to the railways. That will allow the new system for railway safety proposed by the Health and Safety Commission, endorsed by the chairman of BR and accepted by the Government, to be implemented by regulations under that Act.
Other clauses cover board pension schemes, the British Transport police, concessionary travel facilities for employees, and clauses 118 to 123 cover financial provisions to allow the continued provision of subsidies and grants in the new railway, including the improved arrangements for freight facilities grants to which I referred earlier.
I come now to some of the points that have been raised, including those raised in earlier debates, which enables me to deal with them briefly. I start with the interim report of the Select Committee on Transport. There is much common ground between us. For example, we are agreed that there should be a regulator. We have included provisions in the Bill for independent consumer committees. We agree that freight should be privatised. We are committed to continuing subsidy for passenger services. We have already clarified, as I have again today, other issues about which the Committee was concerned, including network benefits, pensions and access charges.
One concern that was raised in the early months in particular was safety. I spoke about that in the House the other day when I announced the publication of the Health and Safety Commission's report on safety. The safety concerns have now been fully dealt with. It is noticeable

that they are not now being commented on. The Government accepted in full the 38 recommendations, and the chairman of British Rail agreed that the safety aspects of the new regime were fully satisfactory.
Pensions is the second area to be raised, naturally and understandably, with me, and in many other ways, by the railway unions. I fully understand their concerns about pensions for existing employees and for retired British Rail pensioners. We have produced a consultative document on that which makes it clear that we shall make available an industrywide pension scheme for which the unions particularly asked. I believe that that deals with all the key questions on pensions.
There will be controls on railway operators' freedom to increase fares where they might otherwise be able to take advantage of having significant market power to exploit passengers—for example, on London commuter services. Those will be exercised by the franchising authority for franchise services and by the regulator for fully privatised services.

Mr. Tim Renton: Will my right hon. Friend give way?

Mr. MacGregor: I must get on—I hope that my right hon. Friend will forgive me.

Mr. Renton: rose—

Mr. MacGregor: My hon. friend and I have already corresponded on fares.

Mr. Renton: rose—

Mr. MacGregor: I shall give way for the last time.

Mr. Renton: I appreciate my right hon. Friend giving way.
I agree with much that he has said this afternoon, but it would be helpful if, before he finishes, he would explain why he is so confident that the combination of regulator and franchising director will solve the conundrum that we have had for so long on the commuting lines out of London. As my right hon. Friend the Member for Guildford (Mr. Howell) said, how can there be substantial investment in the infrastructure without excessive increases in fares? My right hon. Friend must realise that thousands of my constituents depend on his answer. They have to get to work every day in London, Crawley, Gatwick or Brighton—punctually, and at a price that they can reasonably afford.

Mr. MacGregor: I have already corresponded with my right hon. Friend on that. I see no reason why fares should increase faster under the new system then they do under the present nationalised industry structure. In many cases, they will be more flexible and will be reduced. I have already described how, through the franchising authority or the regulator, controls will continue on commuter lines.
There has been substantial investment in many areas of BR in recent years. For example, I know that it does not help my right hon. Friend, but, as I have mentioned, the Networker line has just received an investment of £800 million. That has been possible as a result of the increase in subsidies to British Rail despite the problem of declining revenue. Such support will continue. [Interruption.] It will be for Railtrack to decide its priorities. In addition, franchisees will be able to take advantage of the leasing


market and of private capital. [Interruption.] My right hon. Friend will know that we now have a £150 million facility scheme.

Mrs. Gwyneth Dunwoody: On a point of order, Mr. Deputy Speaker. This is a vital debate, and it is almost impossible to hear the Secretary of State. If the Minister does not intend to give way, will you at least encourage him to address the Chair?

Mr. MacGregor: I am happy to repeat what I have just said, because I know that it is important to the hon. Lady.
We shall be enabling and encouraging private sector capital. The £150 million leasing arrangement, introduced in anticipation of privatisation, is part of that. The prospects for increased investment are undoubtedly greater under the proposed system than under the present system.

Several Hon. Members: rose—

Mr. MacGregor: I come briefly to closures, which is a matter of great concern to many hon. Members. I see no reason why privatisation should lead to a reduction in passenger services. I have made it clear that we shall continue to pay subsidies to support socially necessary railway operations on unprofitable lines. The availability of public subsidy will mean that the private sector can earn a reasonable return on services that currently make a loss.
In return for public subsidy, franchisees will sign legally binding contracts with the franchising director which will specify the quality and frequency of the services that they will be running. Franchisees will not be able to close down loss making lines. Where proposals for closures come in the future as they have in the past, the Bill makes it clear that we shall continue with the current strict statutory procedures.

Mr. McFall: rose—

Mr. MacGregor: Finally, a point that has frequently been raised concerns what is described as the bureaucracy under the system. When the new system is up and running, it will be more streamlined and less bureaucratic than the present system. The reason for that is straightforward. The new system will have an independent safety authority. We have an independent safety authority now, and no one is suggesting otherwise. It will have consumer committees—the rail users committees. We have them now, and no one is suggesting otherwise.
It will have the franchising authority, which will carry out a function of the distribution of subsidy which at present is carried out between my Department and British Rail and so already exists. However, in future it will be more transparent and open for everyone to see, whereas now it is sometimes difficult to know where the subsidy goes. Therefore, that function basically exists at present. We shall have Railtrack, whose function exists now. The only new element is the regulator, which the Select Committee has said is necessary.
Therefore, there is no increase in bureaucracy. At the moment, British Rail has a heavily structured bureaucracy, and the new arrangements will move in the opposite direction. It is rich for Opposition Members to talk about bureaucracy when they are now proposing a new independent railway commission.
That brings me to the Labour party. Yesterday morning, I heard that Labour was launching that

afternoon its 10-point plan for the railways. What an impact it had. I had to scour this morning's newspapers with a magnifying glass for even a mention. Then, courtesy of The Guardian, I found seven of the 10 points. No wonder the plan was ignored: apart from the usual more staff, more costs, and more subsidies to run the present system, only two points said anything new. I say this for the benefit of my right hon. and hon. Friends, because I am sure that they did not spot that report in The Guardian this morning.
The two points were a new independent railways commission with wide-ranging powers to oversee British Rail—who is talking about bureaucracy?—and powers for British Rail, still wholly in the public sector, to borrow from private funds free of all Treasury constraints, just as the French railways do.
What is the consequence in France? It is a total debt of £14 billion, compared to British Rail's £2 billion; an annual interest payment of £1.3 billion—[Interruption.] No wonder the Opposition do not like to hear this. That annual interest payment of £1.3 billion—a colossal burden on French taxpayers and rail users—compares with British Rail's £80 million. The result is that 20 per cent. of SNCF's annual costs are debt interest payments, compared with British Rail's 1.5 per cent.
If that is Labour Members' prescription for British taxpayers and rail users, I tell them to beware—it would be a total disaster. That would be the consequence of Labour's proposals—just throw more taxpayers' money at it; run the railways for the railwaymen; ignore completely the lessons of other privatisations and the benefit that they can bring to customers by better systems, greater motivation, innovation, and enterprise.
There are benefits to the customer. British Telecom's prices are down 27 per cent. in real terms since privatisation, with much better services, more choice, and further innovation. British Gas prices are down by 20 per cent. in real terms. There are the benefits of investment: in all the major industries, there was greater investment after privatisation than before. And there are the benefits to the taxpayer.
Each and every time that we embarked on the privatisation of an industry, the Labour party opposed it. Time and again on Second Reading, it said that it would reverse our proposals—as the hon. Member for Kingston upon Hull, East (Mr. Prescott) will no doubt do today. Each and every time the Labour party predicted disaster, and each and every time we proved it wrong.
We proved—by the success of the British Airports Authority, British Airways, National Freight Corporation, National Express, British Telecom, the regional electricity companies, and British Gas—that the involvement of the private sector works, and works well, for the customer.
Each and every time, the Labour party had to admit that it was wrong—because one does not hear it say today that it will renationalise any of those ventures. So it will be for British Rail. The hon. Member for Kingston upon Hull, East or his successor will be forced to admit that our proposals, as outlined in the Bill, are the right way forward for our railways of the future in the interests of passengers, freight, and employees alike. That is why I commend the Bill to the House for a Second Reading.

Mr. John Prescott: The Secretary of State said a considerable amount, much of which was of interest, and gave information and facts that we have wanted for a long time. However, it is extremely difficult to make a proper judgment on the right hon. Gentleman's statements without the documentation relating to complicated aspects—as I am sure he would be the first to concede.
The right hon. Gentleman followed exactly the same procedure in respect of the health and safety document, which he introduced in his speech but which was already in the Vote Office, ready to be distributed. The right hon. Gentleman could have paid the House the courtesy of distributing that document, so that we could have formed some judgment on his later claim that the railway system will be much safer.
We shall find the same with track charges. The Secretary of State has the track costs document printed and ready—is that not right? I ask the Secretary of State: is that document ready now? It is ready, printed, and available—we all know that. The right hon. Gentleman could have produced that document on an issue that is essential—as was pointed out by the Select Committee and by all who criticise the privatisation proposals. The right hon. Gentleman introduced it in his speech, which makes it difficult for us to reach a proper judgment. No doubt that document will be produced before the Committee meets, which will probably be on Tuesday. We could have had it in time for this debate. That shows the contemptible way in which the Secretary of State introduces material to the House.
The right hon. Gentleman could have been a little more sympathetic in respect of his new proposals on franchising and allowed hon. Members representing Scottish constituencies to intervene, particularly as he is subjecting Scotland's entire railway system to this experiment. That is one reason why the House is angry about statements in the Secretary of State's speech.

Mr. McFall: I thank my hon. Friend very much for allowing me to intervene. Last week, I spoke to commuters and concerned individuals in Inverness. They pointed out that the Ness bridge in Inverness was dismantled in 1989 but, because of floods, had to be rebuilt last year at a cost of £3 million. Scotland has 2,200 bridges. We saw the damage done by the Perth floods, which cost British Rail £1 million. The Secretary of State said that with the introduction of the private sector there will be private sector discipline. What guarantees can be given about those bridges and Scotland's social subsidy? It seems that the Secretary of State has no guarantees. That is no comfort to the people of Scotland.

Mr. Prescott: Clearly, we shall want to question the Secretary of State on that essential point in Committee. It is important to know where the money for the rail track costs and the necessary safety investment that he mentioned is to come from. I shall return to that point later.
The Secretary of State began his remarks by speaking of a historical change, and one is certainly being made. The right hon. Gentleman suggested that it will be for the better, but that is not proven—certainly not by the right hon. Gentleman's speech. The Bill's provisions seem to change from day to day. It has changed tremendously,

from privatisation to commercialisation, due to one or two cherry-picking ventures. The Secretary of State stated today where they will be: they are the profitable routes—not a railway system. As was said by a Conservative Member, the Government should be more concerned about who is to run the railways than who is to run one or two lines.
The Secretary of State said that privatisation had produced better results, whether it be in respect of gas, electricity, or water. That is disputable, but we can have that argument on another occasion. I cannot use the hour that the Secretary of State has taken, because that would deny a number of Back Benchers an opportunity to speak.

Mr. Stephen Milligan: rose—

Mr. Prescott: No, I will not give way.
A comparison has been made between British Rail and the privatisation and deregulation of buses, which it was said would provide better services, lower fares, and investment. Instead, there is clear evidence that passengers pay a lot more, fewer services are available, buses run only on profitable routes, and there are no service cross-subsidies. The bus manufacturing industry has collapsed from 7,000 orders per year to none. It is plain that deregulation and privatisation destroyed our effective, modern bus industry.

Sir David Mitchell: rose—

Mr. Phillip Oppenheim: rose—

Mr. Prescott: No—I am not giving way to Tories.
At last we have the Second Reading. Never has a Bill changed so many times. Never has a Bill been so universally condemned. Never has a Bill lost its essential justification—that private competition and privatisation would provide the means by which to change the service. All that the Secretary of State seemed to claim was that there will be a change in the culture. That was his essential point. He is to replace public management with private management, and there will be fundamental changes. Of course there will—one of them will be the pay inceases for the bosses at the top who will be running the system. That will happen straight away.
We shall have to wait to find out whether privatisation will lead to improvements, but I do not believe that it will. Essentially, the Bill is an enabling measure—

Mr. Milligan: Will the hon. Gentleman give way?

Mr. Prescott: In a second.

Mr. Keith Mans: Weakness!

Mr. Prescott: All right, I will give way now.

Mr. Milligan: I am grateful to the hon. Gentleman for giving way at last. He mentioned the gas, water and electricity industries. In the last Parliament, he said that if the Labour party took power they would renationalise those industries. Is that still his view?

Mr. Prescott: The hon. Gentleman should be more concerned about the state of the Eastleigh and Southampton railway services. He should be intervening on that subject.
I firmly believe that a publicly owned railway system can provide a better service than one that is privately owned. According to the Secretary of State, this is not privatisation but commercialisation. It will lead not to


competition in the provision of services, but to competition for the taxpayer's money for the payment of subsidies. That is the only competition that there will be. Instead of the public monopoly about which the Government are so concerned, we shall have what the Secretary of State called "exclusive services"—in other words, a private monopoly. We shall be replacing a public monopoly with a private one.
The process will not, however, be completed under the present Government. According to the Secretary of State, it will not be completed until the next century. Nor will it reduce bureaucracy. As the Secretary of State has been forced to admit, there will be more quangos. I note that he drew a distinction between the present employment of civil servants by British Rail and their future employment by quangos. One of the Tory party's essential arguments has concerned the growth and proliferation of quangos in the civil service, and in bureaucratic organisations. Now the Secretary of State is establishing quangos and claiming that they will not increase bureaucracy. The evidence is against the right hon. Gentleman. I do not believe him, and neither did the Tory party at the beginning of the decade, which spent all its time abolishing quangos, for the very reasons that I have cited.
The Bill offers no guarantee that the existing network of 11,000 miles will continue. That was the justification for the public service obligation payments made by the European Community. Despite what the Secretary of State said, there is no guarantee of protection from closures, especially in rural areas. Let us consider the reasons currently given for such closures. Perhaps British Rail wants to run a train from Yarmouth, in the Secretary of State's area, to Peterborough; it wants to speed up the journey, so it begins to cut the number of rural stops.
I must emphasise the importance of network services, whether in rural or urban areas. Often people who live in rural areas want to drive to the station and then travel into town by rail to avoid the congestion on the roads. The Secretary of State has an answer to that: the introduction of road pricing. That is another proposal that he has slipped in. Clearly, huge charges for road freight and passengers will be needed to subsidise the policy, and they will apply not to taxpayers but to road users. That is what the Secretary of State has told us.
There is no guarantee, either, that we can sustain the £1 billion investment which, according to the chairman of British Rail and everyone else concerned, is the minimum that will be necessary. The Secretary of State has talked of a record level of investment; what he means, of course, is the actual amount put into the channel tunnel. The chairman of British Rail has told the Select Committee that, after two years, investment in the tunnel will fall to an average of £600 million a year. That is less than the average in the late 1980s, and it is not enough to maintain the support that Network SouthEast requires.
The Secretary of State plainly has not convinced Conservative Members with seats in Network SouthEast areas about the source of the money or indeed whether it will arrive. Obviously it will not arrive, although a £1 billion annual investment is needed.

Mr. Jacques Arnold: Will the hon. Gentleman give way?

Mr. Prescott: I certainly will not give way to you.
Furthermore, the Secretary of State has not guaranteed the maintenance of a proper standard of safety. He has not guaranteed that the railways will retain freight, rather than more of it being transported by road. It is interesting to hear the right hon. Gentleman say that he is now convinced of what needs to be done to transfer the traffic from road to rail. He may not know it, but a lot of the ideas that he has announced have been pinched from Labour. The leasing proposals are one example, but three more of his ideas can be found in Labour's transport document, produced at the time of the general election. We suggested that heavy lorries could be taken from certain sites to the railheads, and that subsidies could be made available to relieve motorway congestion.
All the ideas offered by the Secretary of State were published years ago: he is merely trawling our documents and adding our policies to his. I agree that those proposals will help to transfer traffic from road to rail, and I am in favour of that, but the Secretary of State has just announced that there must be an 8 per cent. rate of return on freight. His present policy is driving a number of private companies to transfer the equivalent of 100,000 lorryloads from rail to road in the south-east. He need not wait for legislation to change the position; he could change it now. Select Committees have recommended such action. It is arrant nonsense to talk of the need to wait for legislative change. The present Secretary of State seems unaware that he has the powers to introduce change; his predecessor suggested that he would introduce it, but never did.
I welcome the proposals. I have advocated transferring more traffic from road to rail, and they will help us to do that. My only difference with the Secretary of State lies in the fact that it is unnecessary to wait 18 months for legislation before effecting the policy. There is a specific reason why it is now so important to reverse the policy of driving traffic from rail to road. British Rail has increased its prices to some freight operators by as much as 150 per cent. It is not possible to operate a service on such terms. Is the right hon. Gentleman telling us that he will allow hundreds of lorryloads of freight to travel by road when he could stop it? Will he reverse that stupid policy, which has arisen directly from the track charges required to meet the 8 per cent. rate of return that he has imposed on British Rail? I am happy to give way to the right hon. Gentleman because a good many people would like to hear the answer.

Mr. MacGregor: In fact, the rate of return which British Rail is being asked to achieve, and which it is not achieving, is a good deal less than 8 per cent. Some services are making substantial losses; those losses must be addressed, in view of the heavy losses currently being incurred in rail freight.

Mr. Prescott: I cannot understand the right hon. Gentleman's logic. Has he not announced that he is prepared to subsidise those companies to deal with the track charges because of the difficulties of marginal costing? Legislative change is not needed for that; as I have said, these are just Treasury rules, which are absurd. The Secretary of State clearly does not understand what he is doing with the railway system. He could reverse the policy if he wished, but he appears not to know what powers he has. He is not competent to understand what is involved in transferring freight from road to rail.
The Secretary of State spoke of passengers' rights, and protection through the passenger transport consultative committee. The committee has issued a report saying that the Bill will not improve the position, and that it will reduce the committee's powers. I do not know whether the Secretary of State reads the documents that are sent to every Member of Parliament, but that is what the committee says.
Certainly, the Secretary of State has not inspired us with any confidence about concessionary travel. He said that it was guaranteed, but according to clause 117 such travel "may" be provided. As every hon. Member knows, "may" is not the same as "shall". Anyone who doubts what I am saying should consider what happened when the bus service industry was deregulated. Concessionary travel was one of the first things that went, along with through ticketing, the fare structure and the timetables. The evidence is clear.

Mr. Mans: On a point of order, Mr. Deputy Speaker. I seek your guidance on a specific point. Is it right for the hon. Member for Kingston upon Hull, East (Mr. Prescott), as Opposition transport spokesman, not to declare his interest as a member of a railway union?

Mr. Deputy Speaker: That is not a matter for the Chair.

Mr. Prescott: I think that it is acceptable to record such an interest in the Register of Members' Interests. So far, no one has doubted my union connections. Let me add that I do not receive a penny in sponsorship—unlike Conservative Members with banking and other interests.
The overwhelming criticism of the Bill, especially on Second Reading, relates to the fact that it is rejected overwhelmingly by people outside the House. The Secretary of State constantly tells us about the people who support it. The evidence is clear—

Mr. Adley: Will the hon. Gentleman give way?

Mr. Prescott: Yes, I shall give way in a moment to the Chairman of the Select Committee.
The Independent on Sunday reports quotations from people who know, people who have a lot of experience—Tories, of course. Lord Ridley said:
I do not believe it is possible to privatise the railways".
He was supported enthusiastically by Lord Young and Lord Whitelaw. In its editorial, the Daily Express said that
the Government … would be wise to rethink this risky undertaking.

Mr. MacGregor: rose—

Mr. Prescott: Let me complete the list, and then the right hon. Gentleman can give a full answer for once.
The National Opinion Poll found that the system would get worse if it was privatised. The Central Transport Consultative Committee, the statutory watchdog for the industry, said that it would be the passengers
who pay the price as operators seek to maximise profits.
Let us consider what the experts said. The Select Committee made it absolutely clear that few of the people who gave evidence to it have endorsed the Government's specific proposals. Jane's World Railways says that the proposal cannot be viewed as
better than a dogma-driven exercise, utterly irrelevent to national need.
The banker who advises on the privatisation said:

The economics of railways may not attract private-sector investment".
He should know. A lawyer who dealt with the Clapham crash said that the difficulty—[Interruption.] Yes, it is speeding up a bit because of the amount of time involved, but it is a serious point. A lawyer involved in suing on behalf of a number of people involved in the Clapham tragedy said that
it would be impossible … for the traveller to know whether to sue the train operator, Railtrack, who run the signals, or the owner of a sold-off Clapham station.
That is a serious point.
Many others have pursued the issue, including rail bosses. The chairman of British Rail has made his views clear. He said:
My view is that a railway should meet the social needs of the country as well as the economic needs.
Lord Marsh, who I think was one of yours and one of ours at some stage, but who was also the chairman of British Rail, said:
Logic has been abandoned a long time ago … Why are we doing this?
The Swedish rail chairman, who I should have thought would know about this, said:
I don't see any commitment in your Government's proposal to modernising the rail network.
Howard Davies, the Director General of the Confederation of British Industry, said that
there is a real danger that privatisation will be a blueprint for bureaucracy.
He should know. The list goes on and on.
Across the country, all groups in the community, including the industrialists, are telling the Secretary of State that the privatisation of the railway cannot work in the way he suggests and that it would be disastrous for the railway industry.

Mr. MacGregor: The hon. Gentleman has engaged in some selective quotations. I must put him right on one so as to put the record straight. My noble Friend Lord Young said clearly:
I have no doubt that rail privatisation will add to the long line of services successfully enhanced by the addition of private sector skills
and made it clear that he was backing the proposals. [Interruption.] I shall be happy to read the whole letter because it is entirely supportive of what we are doing. Many industrialists also support us. I have letters from industrialists saying that it would undoubtedly offer the best service. The hon. Gentleman has quoted from various leader articles on the day the Bill was published. I shall not weary the House by reading a long selective quotation, but the hon. Gentleman might also have seen a list of eight leaders which supported what we are doing.

Mr. Prescott: The Secretary of State is not denying what Lord Young said in January. Clearly, Lord Young has been nobbled since then so that the Secretary of State can quote him. Lord Young is confused, but what I read was exactly what he said. That is a kind of nobbling job. No doubt the Secretary of State has gone to a few more saying, "Can you please say you support this system?" In reality, they do not.

Mr. George Kynoch: In one debate last year, I understand that the hon. Gentleman said that he did not necessarily believe that British Rail needed to be wholly publicly or wholly privately owned. In another debate he said that it needed to be publicly owned for very good reasons. Which does he believe?

Mr. Prescott: I see nothing inconsistent in a publicly owned railway having access to private capital and access for private operators to work on some of the lines. [HON. MEMBERS: "Oh."] That is how it was done with some of the freight systems. It is not new for British Rail. It might shock some Conservative Members but British Rail management, largely because of the freight operations, did not have sufficient resources to put the necessary investment into the track, trains and engines. It basically told private companies that if they would pay for the engines and the rolling stock, it would allow them to operate on the lines. They operate under British Rail's conditions of operation and that is acceptable to them.

Mr. Adley: On the question of freight and my right hon. Friend's powers to act immediately to implement what he has announced, my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) and I share the hon. Gentleman's view that the Secretary of State has the power and we would urge him to use it immediately.
Does the hon. Gentleman understand what I understood my right hon. Friend to be saying about freight costing? At present freight has access to marginal costs, but under the new simplified system the Government will give funds to Railtrack, which will have to make commercially driven revenue. That will put up the prices and a rebate will be available from Railtrack for operators which will apply for subsidy, presumably to Railtrack. Instead of one management decision, five quangos will be involved. Is that the hon. Gentleman's understanding?

Mr. Prescott: Precisely—that is absolutely right. Even worse, it means that the costs of Railtrack will be passed on to all operators. When we separate Railtrack from British Rail, as the Secretary of State now proposes, British Rail will presumably operate 95 per cent. or 90 per cent. of the service. Only a minority will be pinched by the private operators, so the 90 per cent. will be operated largely by British Rail. Because the cost of the track will now have to involve a profit element, it will mean a major hike in the cost for British Rail which has to fund it from the public service obligation, which means through subsidy from us. All we shall do is increase subsidies. Anyone who knows anything about the operation of railway services knows that to be true.

Mr. Oppenheim: rose—

Mr. Prescott: No, I have given way for the last time.
The central thrust of the Government's case, therefore, is that it would change the culture. By introducing private management and entrepreneurial flair, they intend to achieve a change of culture. They believe that we shall then get the change of culture that will bring about all that the Secretary of State claims will be improvements. There is no doubt that he has a dream and a vision, but I wonder whether he is not merely dreaming and not looking at the practical realities.
Where is the historical evidence that changing the management brings those improvements? In Britain, pre-1921, there were 120 private railways all begging to be taken over. They were clapped out, so when the first world war came we had to make them into four big rail operators and therefore reduce the idea of competition. Of course, they were still private management led.
Let us consider the record of that period. I am grateful to my right hon. Friend the Member for Chesterfield (Mr.

Benn) for giving me a copy of a speech that he made in 1960. He referred to the record of the Great Western railway, to which I referred in an earlier speech, and which was the only one to make a profit. My right hon. Friend said that in 1929 the GWR was paying 7.5 per cent. on its dividends. A year later, the dividend fell to 5 per cent., the following year to 3 per cent. and, in order to pay the 3 per cent. next year, it dipped into its reserves. It then asked for a 10 per cent. wage cut and said that in order to pay the 3 per cent., it would have to pay out of its reserves. My right hon. Friend said:
In 1937, it managed to raise it to 4 per cent. by postponing modernisation. It cut £3 million out of its capital requirement programme".—[Official Report, 13 April 1960; Vol 621, c. 1389.]
It did that in order to pay 4 per cent.
The railways were saved by the war. Nobody doubted that what happened was necessary in the national interest. As most of the investment had not been carried out, it was an inadequate system, but it all took place under a private system and, interestingly enough, with the type of quangos that the Secretary of State now proposes. He is talking about regulators and clearing houses, which all existed in the 1930s. Private ownership of the industry did not mean that the investment was made. It did not produce good entrepreneurial flair, so we know that is not true.

Mr. Oppenheim: rose—

Mr. Raymond S. Robertson: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman is clearly not giving way.

Mr. Prescott: May I say to the Secretary of State that for someone—

Mr. Oppenheim: On a point of order, Mr. Deputy Speaker. Is it in order for me to point out that the Opposition spokesman has given way only three times?

Mr. Deputy Speaker: No. That is not in order.

Mr. Prescott: It might be only three times, but it seemed like 33.

Mr. Oppenheim: rose—

Mr. Prescott: I would not give way to the hon. Gentleman's mother.
The Secretary of State lacks an awful lot of knowledge about the railway system. His central case is that private entrepreneurial flair was needed and that we must privatise the industry. He should consider British Rail's record. I have been critical of British Rail—make no mistake about that—but it produced some of the best hotels in the world. People know about Gleneagles. Why did they fail or not have investment? The Treasury would not allow them to mortgage their property to continue the investment in the development. It was a Treasury rule; it was nothing to do with private managerial flair.
The first development of containerisation in any maritime base was done by sealing in the United Kingdom. That development began to fail primarily because the Government were not prepared to invest in more ships and the industry was starved of capital. The tilt mechanism and the advanced passenger train system was first developed in the United Kingdom. It was not completed, but it was done in other countries.
The fast 125 diesels and the 225 electrics were ahead of their time in technology. It is a credit to the management of that industry that they led the way in the development of technology using conventional track. The evidence is there. Clearly, they were good. The real problem was that, although they produced a safe railway, the lack of resources began to undermine the system. The industry had the best productivity of any railway system in Europe. It was the same in the 1970s and the 1980s. Essentially, the industry was starved of financial resources.
Who was responsible for the resources of British Rail? It is clear that one cannot take all of the financing from fares. Resources must come in from some form of subsidy. Therefore, Governments must be involved. The Secretary of State may have said that the European railway system had already borrowed a lot. If the British people had the opportunity to choose between the French or German railway systems and our system, I have no doubt that they would pick the system with a higher quality and high technology, which is what everybody in the United Kingdom wants. They appreciate that such a system must be financed, and that resources cannot come out of the fare box. That is the real problem of the railway system.
The real problem with the British Rail system is that it has not had sufficient resources. The Government believe that a railway system can be run on a financial framework. That means that one begins to cut back the public subsidies, as the Government did during that period.

Mr. Raymond S. Robertson: Will the hon. Gentleman give way?

Mr. Prescott: No. I have given way quite a lot. [HON. MEMBERS: "No."] Yes, I have. I cannot take the hour that the Secretary of State's speech took.
Investment has not taken place. The Government have tried to put a financial framework on our railway system. Clearly, the railway system needs £1 billion a year. On the projections from the Treasury and his Department, the Secretary of State must accept that investment will be cut back in the next two years to £600 million. That is reality, and that is what the Secretary of State must recognise. Therefore, he must get resources from the private sector.
The Secretary of State knows that I have advocated leasing and bond ideas. Those ideas are used by the publicly-owned railways in Europe. The Secretary of State need look only at those ideas as a way of financing railways. Every railway system does it, and the Government cannot afford not to do it. It is true that one does not have to maintain the level of subsidies at the level to which the Secretary of State referred.
It is readily recognised that British Rail has been effective in its productivity. Even with the projections which included private finance, experience has shown that the tunnel link collapsed not because the public sector and private sector could not get together—management had good ideas—but because the Government were not prepared to find the financial resources for the public sector.
It is the same with the Heathrow-Paddington line. All we had to provide was 20 per cent. public money—80 per cent. was to come from a private company, BAA. Why were we not able to endorse that? It was nothing to do with managerial ability; it was a decision by the Government.

We wait to see what will happen with the Jubilee line fiasco. Experience of private management in British Rail shows that Tiger Rail, Charterail and Stagecoach collapsed. They had private management and problems with track costs. The Secretary of State is addressing that problem at present.
On the rail side, the Secretary of State has answered the problem by saying, "I will provide more subsidies." That is what he said in the House today. I am not against it. However, when he charges us with wanting to throw money at freight, it is a bit much when his own proposals relate to subsidising freight. It is not acceptable for him to accuse us of throwing subsidies at freight and then to come here with his own proposals to do exactly the same thing.
Our argument with the Government's approach to the matter is that they are purely ideological. They hate publicly-owned industries. It is not that they do not believe that public sector management cannot do it. They are not prepared to give it the same terms as the private sector had to achieve it. They discriminate against British Rail. In the circumstances, they deny British Rail the opportunity to produce a good railway system.
One of the Secretary of State's main claims was that it would be a safer railway. On the Health and Safety Executive, he said that they would make it clear that it would be a safer railway. The Health and Safety Executive made an important qualification which hon. Members must learn:
Companies with little or no previous experience of operating on the railway, and managers with limited experience of railway safety issues, will enter the railway industry as the BR monopoly is broken. Unless considerable care is taken to set up systems to ensure that new operators are properly equipped and organised, there can be no confidence that risk will be effectively controlled right from the start, and that important matters do not fall between the safety arrangements of various parties.
The Secretary of State said that he had adopted the 31 recommendations. I wait to see whether that will be the case.
I refer the Secretary of State to the Hidden report on the inquiry into the December 1988 Clapham rail disaster in which 35 people were killed. The report made an important point about private sector operations:
A further concern is that there are signs that the past high safety standards at local level achieved by giving a high priority to a 'safe railway' above other issues are starting to be eroded by the change in railway culture. If continued, this will strike at the root of our structure. I would not like a major disaster with loss of life to be the reason that forced British Rail to invest in modern safety aids.
The report included a recommendation of the improvements which needed to be made in order to move against the development of a culture which could undermine safety. One of the report's recommendations was to introduce the automatic train protection system. It was felt that the introduction of that system was important to stop trains colliding with each other. The report recommended that the system should be introduced in five years. British Rail have made it clear that it cannot be done in 10 years. Yet it is an important safety provision.
I note that in the publicity in the press today the hon. Member for Havant (Mr. Willetts) proposed that it is no longer necessary to introduce the automatic train protection system. He said:
The cost of installation throughout British Rail is likely to be some £600 million. It is not clear that this amount of expenditure can be justified …There are now welcome signs that this absurd project is being abandoned.


That was said at a conference today with the Prime Minister to discuss red tape. One of the essential recommendations of the Hidden report on the Clapham disaster and Network SouthEast that there should be automatic train protection systems is about to be abolished because the Government cannot afford it. The Government have never told us whether the money will be provided. We know that the system will cost £600 million. The Prime Minister is attending a conference not far from Clapham station to discuss, in effect, how to reduce safety on the railway system. That is our main concern.
We received the Health and Safety inspector's report this week. I was pleased to receive the report, as someone who is always looking for it. Normally, it takes 10 months to come out, but this one has come out in 10 weeks. It is interesting that the report says that railway safety has improved:
Serious incidents and fatalities declined from 161 in 1990 to 131 in 1991–92.
Any improvement in safety is to be welcomed, but that is a snapshot. How can one judge anything if one merely compares one year with another? Why are we not looking to see the reality of the first half of the 1980s compared with the second half? The inspector's report contains a graph for all to see. It is misleading to suggest that there is an improvement in railway safety on those grounds. I looked closely at the graph. When one looks at the figures, it is clear that safety on the railway has deteriorated between the first five years of the 1980s and the second five years. The number of fatalities has increased by more than 22 per cent. Those fatalities were largely due to technical effects brought about following inadequate investment in our track and signalling system.
What is significant about the increase between the first five years of the 1980s and the second five years is that during that period the Government reduced the amount of subsidies, support and investment levels in British Rail, which had an effect on safety. The emphasis during that period was on reducing costs. Instead of the Secretary of State telling the House that everything on the railways is fine, I suggest that he look at the figures in more detail or get his staff to analyse them. Will he still be convinced? Will the money for the automatic train protection system still be available? Can the Secretary of State tell us that? That is one major decision on safety that he could announce if he wanted to convince us of the truth of what he has said about the future safety of the system. Will he guarantee that that money will be available?

The Minister for Public Transport (Mr. Roger Freeman): British Rail spends some £230 million per annum. The Hidden recommendation in relation to automatic train protection was that it should be applied five years after the development and trialling had been concluded. That has not yet happened.

Mr. Prescott: Is the money to be provided for the system as soon as it is developed? That is the question that I asked. The remarks of the hon. Member for Havant suggest that it has been decided that the money will not be provided and that the Government are about to drop the automatic train protection system.
If what the Minister says is true, the decision whether the money should be invested will lie not with the Secretary of State but with the track authority, which will be divorced from British Rail. Will the track authority have to make such decisions? If it does, will not its mind be

exercised by the consideration that if it spends £600 million on improving safety, track costs will increase for all the franchise and freight operations whose ability to provide a profitable service will have to be judged? Can we not now see the beginnings of the conflict between the commercial culture and what is needed to maintain a safe railway system?
I note that the Secretary of State and the Minister are not saying that the money will be available to implement that recommendation of the inquiry into the safety of the railways. I can only say that safety is bound to be affected and that that fact will be noted.
The Government's judgment about the separation of Railtrack will undoubtedly make it much more difficult to operate services. What of the lines that the Secretary of State has made available for the cherry pickers? And it is certainly cherry picking, is it not? No one doubts that it will be possible to make money on the east coast line. Any silly fool, whether in public or private management, can make money on that line; it is making money now. Some £420 million worth of taxpayers' money has been invested to maintain that line. How much will the entrepreneurs now pay for the track? Mr. Sherwood of Overseas Containers has made it clear that, if he has to pay the full price for tracks, he will not be able to operate a commercial service. He is one of the 50 on the list of applicants that the Government keep on about.
The Tories have always rejected the idea of cross-subsidisation in transport. The French realised the value of the concept years ago, when they were developing the TGV. When the first TGV was built, all sorts of people wanted it to be run privately. Chirac—the mayor of Paris at the time and not a socialist, as the House will be aware—favoured privatisation. People explained to him that, following privatisation, all the profits from the first, profitable route would go to the shareholders, whereas if the profits were allowed to be reinvested in the second stage, a network could be developed as the profitable routes began to finance the less profitable ones.
Cross-subsidisation is relevant to the future of the east coast line. What will happen with that line is that the branch lines will go first—that means Hull, my own area, and Harrogate. At present 125s have to be used as that part of the line is not electrified and no doubt the Railtrack people will not go ahead with that project. Will the Aberdeen route be retained and electrified to give a through service or will people have to change trains at Edinburgh? Those are the decisions that commercial operators will face. Under a British Rail system, the profit from the east coast network could be reinvested to subsidise the west coast line. Such investment is desperately needed: no entrepreneur is offering to pay £1 billion for the west coast line.
Will not the entrepreneurs on the east coast line say, "Why maintain a railway up the west coast? We'll take people up the east coast to Glasgow and Edinburgh." The west coast network will then begin to close. It will be maintained as far as Manchester, but no one will undertake the necessary investment thereafter. Then we shall begin to see a reduction in investment in new trains and wagons, which will further undermine the manufacturers. In a few years' time, no doubt the Secretary of State will come to the House and say that the Government are having to close down rail manufacturing because no orders are forthcoming from within this country—exactly what has happened with Leyland DAF, as we heard in the


earlier announcement. The Government simply do not understand how heavily our manufacturing industries depend on the railways. That is a crucial part of our analysis.
The Secretary of State referred to the Great Western line to Paddington. Will that line go only as far as Plymouth, or will it be guaranteed to go as far as Penzance? From talks that are already taking place, we are led to believe that it will go only as far as Plymouth. Can the Secretary of State tell us whether it will in fact go further? Who will undertake the necessary investment in the 30-year-old stock of 125s on the Great Western line? We are talking about hundreds of millions of pounds; no private entrepreneur will be prepared to invest that amount.
Why is the Gatwick line to be kept with InterCity? The books were fiddled to allow the resourses to be given to InterCity and to improve InterCity's accounts so that the Government could sell it to the private sector—although, in fact, they have not been able to do so. Why cannot the profits of the Gatwick line, which is a premium service, be reinvested in Network SouthEast instead of going to a few shareholders who happen to have pinched that particular jewel?
The Southend line is also on the list. For the record, let me say that the Secretary of State has pinched another of my ideas here. [HON. MEMBERS: "Oh".] It is a matter of record. I sold my pamphlet to the Secretary of State for 25 quid; he got it very cheap and pinched most of the ideas. There is no reason why an industry in the public sector cannot use private money. Why cannot private industry be asked to finance the project, as happens with road bridges, with the new stock being returned at the end of the period so that it can still be run by British Rail? There is no reason why the public sector cannot do that. It is ideological nonsense to suggest that it has to be the private sector.
We believe that there is an alternative. There is no time to go into it now, but our suggestions have been published in pamphlets before today. As the Secretary of State knows, they were embodied in an instruction that I would have given to the chairman of British Rail to implement what I believe to be a far better railway system. We have made clear our view on all those things.
The Bill will make the railways less safe. It will be a cherry pickers' charter, as we have established from what the Secretary of State said today. Profits will be put before service needs. It will be a reduced network service. Fares will be higher. Investment will be less. More traffic will be chased off rail on to the roads, adding to the congestion and the environmental damage.
Above all, we shall have a different railway industry, driven solely by the desire to make profit. We shall be going in the opposite direction from the rest of Europe. What we want in Britain is modernisation, not privatisation. What we are getting is the Secretary of State's ideological obsession, which is rejected by every part of the community. I can only hope that the House will join the Opposition in rejecting the Bill.

Sir John Stanley: This is my second speech on the current legislative proposals. When I spoke in the debate on the White Paper on 29 October

1992, I said that I supported the Government's intention to try to bring the private sector into the railway system but expressed grave concern about the fare implications of the proposals, particularly for middle-distance and long-distance commuters using Network SouthEast, who include a large proportion of my constituents.
The potential financial implications of rail privatisation for the household budgets of that group of people are of a quite different order of magnitude from those of other privatisations, such as the privatisations of the telephone system, electricity, gas and water. Those items may cost households hundreds of pounds, whereas on this occasion we may be talking about thousands of pounds. That is a critical consideration for those living in the belt around London.
What the fare implications will be is a matter of judgment. My right hon. Friend the Secretary of State has already set out figures for various privatisations whose effect has been to bring about a reduction in charges. My right hon. Friend was right to do that. Equally, however, other privatisations—for example, water privatisation—have been followed by a sharp increase in charges in real terms.
I suggest that one can discern a general pattern. Where privatisation has taken place following a substantial period of investment in the previously nationalised industry, it has usually been possible for the new regime to bring about a real-terms reduction in charges. By contrast, when a public sector body, following years of under-investment, as in the case of water and, I suggest, in the case of British Rail, has been taken into the private sector, prices have invariably gone sharply upwards.
I believe that, in the case of this privatisation, the underlying pressures are very firmly in the upward category—a judgment to which I come for one reason only, quite apart from the long history of under-investment in the railway system. The existing nationalised industry requires a rate of return on capital of about 8 per cent. I think that I heard my right hon. Friend say that the industry was not achieving that. One certainty is that when this industry is privatised its owners will require a significantly higher rate of return—probably about double the figure I have mentioned. That in itself will put immediate pressure on fares.
What happens will be determined critically by two factors. The first is the future of subsidies. In saying that, I am referring in particular to Network SouthEast. The second factor is the type of fare-control regime.
Those of us who represent constituencies in the Network SouthEast area are very well aware of the critical and direct relationship between the level of subsidy and the affordability of fares. In an attempt to bring home just how critical that relationship is, I put a question to the chairman of British Rail, Sir Bob Reid. I asked him by how much fares in Network SouthEast would have to rise if the current Government subsidy were removed entirely and if Network SouthEast were to continue to achieve the rate of return that British Rail expected of it. Sir Bob Reid's reply was very instructive in that it brought out the key relationship between subsidy and fare levels. It said:
The immediate achievement of the scenario you describe would, we estimate, require a fare increase of about 190 per cent. on 'peak' prices. This would principally reflect the high level of assets inevitably required for use only in 'peak' periods: two-thirds of Network SouthEast rolling stock is


used only during the morning and evening rush hours. There would not be an equivalent 'off peak' increase as this would be self-defeating in business terms.
Let me emphasise, lest anyone be tempted to misrepresent what I have said, that I am not suggesting that one implication of these proposals is a fare increase of 190 per cent. Nor, as is quite clear from the extract that I have just quoted, is Sir Bob Reid. My purpose is to point up very sharply the fact that unless the subsidy level is maintained at its present level, in real terms, the fares implications for mid-distance and long-distance commuters are likely to be very serious indeed.
The Government's policy—repeated twice today by my right hon. Friend—is that subsidies will continue in respect of those lines that are socially necessary. But that comment omits the key piece of information. [Interruption.] Someone asks, "How long?". That is one of the key questions, but even more critical is the level of continued subsidy. There is no point in saying simply that subsidy will be continued. It might be continued, but reduced by 95 per cent. More instructive than what my right hon. Friend said was the answer that I received a few weeks ago from his hon. Friend the Minister of State. I asked the Secretary of State:
if he will maintain the subsidy paid to Network SouthEast at its current level in real terms, and if he will make a statement.
The Minister of State replied:
The specific allocation of the planned external financing limits for British Railways between 1993–94 and 1995–96 between grant and borrowing has yet to be agreed and will be announced, as usual, in due course—[Official Report, 11 December 1992; Vol. 215, c. 824.]
The implication is that there is no certainty about what the level of subsidy in respect of the Network SouthEast area will be if these privatisation proposals go ahead.

Mr. Deputy Speaker: Order. I should like to remind the House that application of the 10-minute rule started at 6'clock. In the case of the right hon. Gentleman, I shall not count the 20 seconds that I have just taken up.

Sir John Stanley: The second critical issue concerns the lines that will be deemed to be socially necessary for the purposes of the continuation of subsidy. Having put that question to the Secretary of State formally. I received the following reply:
It will be for the new franchising authority to decide on the appropriate level of passenger services to procure through franchises in line with the overall guidance provided for him by the Secretary of State. Any subsidy required and its level will be determined by competitive bidding."—[Official Report, 14 December 1992; Vol. 216, c. 32.]
Thus, we have no information as to which lines will be deemed to be socially necessary and will, therefore, attract subsidy. Indeed, we have no more information now than we had when the White Paper was debated.
On the question of the fare-control regime, I regard this privatisation Bill as conspicuously the weakest piece of legislation in respect of the charges aspect of consumer protection. There are three consumer-protection bodies—the regulator, the consultative committee and the regional body. I do not have time to go into detail, but hon. Members will see that, by the provisions of clause 4, clause 66, and clause 67, these bodies are specifically excluded from involvement in fares on franchised routes.
So where is the element of consumer protection? Does it lie with the franchising authority? People may look to the franchising authority, but I think that they will do so in vain. The job of the franchising authority is to get

franchises off the ground. It is concerned with attracting franchisees, not with protecting the interests of the consumer. Therefore, we are left with one person to whom consumers may look for protection in respect of charges —my right hon. Friend the Secretary of State. He has a key role, as was foreshadowed in the consultation document on the franchising of passenger rail services, which says that the Secretary of State can—indeed, will—provide the franchising authority with guidance on a number of matters, including
in what circumstances and to what extent fares might be controlled.
That guidance is centrally important, and this document should be before hon. Members today. Only when it is available will hon. Members be able to make an assessment of the fare implications of these proposals. I tried to persuade Ministers to make it available for this debate, but, as has already been said, they decided that we should receive it only at the beginning of the Committee stage. I greatly regret that decision. Such an important document should be before the House at this time.
The issue of subsidy from the point of view of quantity is wholly unknown. There has been no information about which socially necessary lines in Network South East will be eligible for subsidy. According to the Bill, all three bodies that are supposed to be responsible for consumer protection are excluded from having any role over the fares that will be charged on the lines that will be the subject of franchises. The key document from the Secretary of State about his fare control policy has been withheld from the House and will not be available until the Committee stage. I am, in effect, being asked to sign a blank cheque on my constituents' cheque book. I am not prepared to do that, and while I shall not be voting tonight with the Opposition, I cannot support the Bill at this stage.

Mr. Nick Harvey: I shuddered as I listened to the Secretary of State today commending the Bill to the House as the right way forward for the future of the railways. At the equivalent stage of what became the Transport Act 1985, the then Secretary of State said that its purpose was to halt the decline that had afflicted the bus industry for more than 20 years, that it was not about reducing subsidy but about putting life back into the industry and that the effect of competition would be to reduce costs dramatically so that fares would be reduced.
The then Secretary of State claimed that there was more to the Bill than deregulation and far more than privatisation. It was, he told the House, a full-scale rescue plan for the industry. Given that since the introduction of that measure passenger use of buses has declined by 28 per cent. in metropolitan areas and 16 per cent. in shire areas, may we be assured by the present Secretary of State that this is not to be a full-scale rescue plan for the railways?
The Bill comprises 132 clauses and 11 schedules and gives massive powers to the Secretary of State and the new regulator. It might have been preferable to have had a Bill of one clause which simply said, "The Secretary of State can do what he likes, how he likes, when he likes, and where he likes." It would have had more or less the same effect.
It is ironic that it should be clause 4 which gives a Tory Secretary of State enormously sweeping powers of centralised bureaucracy. He can rule by decree from Marsham street, with freedom to set out the parameters


within which the new rail network will operate. Under that provision he is given guidance on taking into account economic considerations—

Mr. Barry Field: rose—

Mr. Harvey: With the 10-minute rule operating, I will not give way.
He is told to consider economic considerations, but there is no suggestion that social or environmental factors should fashion the decisions he takes with his new powers. As well as being unworkable, the Bill contains no form of vision. It is a system set up to run today's, not tomorrow's, railways. As the rest of Europe is integrating and improving its rail networks, we shall be left behind, with an increasingly antiquated hotch-potch of disintegrated services. Whatever the Minister may say to the contrary, the Bill depends on a myriad of legal agreements at every interface in the new structure.
What will the hypothetical new private sector whizzkid do to rescue the railways? He comes in wanting a franchise, but before he can get started he will have to make at least 10 separate agreements, first with the franchising authority for the allocation of routes; if he requires subsidy, then intrinsically the Department of Transport and the Treasury will become involved; he will have to make an arrangement with Railtrack over charges; if that does not result in an easy conclusion, the matter will probably finally go to the regulator, and it is possible, at least in the early days, that the Secretary of State will become involved at that point. He will already have had discussions with the Health and Safety Executive, with the leasing company over rolling stock and possibly also with two different passenger groups.
He will then have to make separate arrangements for every station and maintenance depot that he wants to use and that is not under his control. If another operator wants to use any of his track, he will have to negotiate with him. That might end up in the hands of the joint industry body. It may even come back to the regulator or the Secretary of State for decision. Only after he has been through all that appalling rigmarole—and has apparently been told by the franchising authority what the fares and frequency of service must be—he will bring his private sector skills to bear. The whole thing is absolutely mad and will collapse under the weight of its dreadful bureaucracy.

Mr. Barry Field: On a point of order, Mr. Deputy Speaker. As the Isle of Wight county council is the only Liberal-controlled county council in the country, is it in order for the Liberal Front-Bench spokesman to try to mislead the House by pretending that his party is against this privatisation measure when the Isle of Wight county council has agreed to it, and in a recent press release—

Mr. Deputy Speaker: Order. That is a matter of argument, not a point of order.

Mr. Harvey: The Bill is a lawyer's paradise but will prove to be a passenger's hell.

Mr. Barry Field: What about the Isle of Wight?

Mr. Harvey: The Isle of Wight county group is entitled to follow its own policies.
The franchising director under the proposed agreement will end up making the key marketing decisions. Those

decisions will not be made by the private sector operators who will be brought in. Despite all we are told about competition and private sector disciplines, there is no guarantee that there will be competition in the bidding for the franchises. If only one bidder comes forward for a franchise, it will try to dictate the terms and seek an inflated subsidy.
According to the Bill as drafted, British Rail is prevented from bidding. In other examples of competitive tendering—in local government and in the production of television programmes and so on—it has always been permissible for the existing in-house operator to bid. In this case, only managers in their own right, who will have to resign their jobs, find capital and leave the rest of their colleagues to sink or swim, will be invited to join in the process. At least if BR as a corporate entity had been allowed to take part in the process, there would have been a guarantee of some competitive bidding.
It is interesting, if not worrying, to note that the Bill spends the most time—all of 10 clauses—dealing with the subject of closure. I hope that that is not an omen for the way in which it will operate in practice. Clause 43 envisages the bus replacement of failed franchises. What will happen when the franchising director runs out of money if, for example, bids for subsidy exceed his budget? Will he become the arbiter of the levels of service to be provided? What democratic accountability will there be over his decisions?
According to clause 111, the remains of BR will be excluded from the responsibility of picking up any failed franchise operations. So what guarantees are there that passengers will continue to receive services?

Mr. Matthew Taylor: Does my hon. Friend agree that, in areas such as Cornwall and Devon, it, will not be a matter of failed franchisees because it is clear that branch lines will become bus routes—that is what the only local potential bidder has said—and that inter-city lines are likely to become branch lines? That is hardly the maintenance of services for local people.

Mr. Harvey: That is indeed a worry. Bus replacement is envisaged and, of course, once rail lines have gone it will be impossible to use them in the future for conveying freight. It is also clear that other network benefits will go. Despite the fact that railcards for the disabled have been guaranteed, there has been no such guarantee for pensioners' or students' cards. It is hoped that the new private operators will consider it in their interests to continue those, but that has not been the lesson of the bus experience.
It is said that a national timetable will be published. It will be handy to have such a timetable, but we want it to be nationally planned. It is no good having a national timetable which simply informs one that one is missing one's connections by five minutes. The timetable must be co-ordinated.
We have many other concerns with the Bill as drafted, not least the fact that there is still no sign of the Government having a strategic plan for the railways, unlike every other European country. I note that 44-tonne lorries will have permission to go all the way to the railhead by road. Will that include the channel tunnel? If so, we shall see many more such vehicles on the roads.
Among our other concerns is the issue of passenger groups not being free to comment on fares, charges or


standards of performance required under franchise agreements. There is also the question of the bypassing of metropolitan and shire authorities and their having no formal relationship with the franchising authority. There is little to encourage me to believe that the system will produce any significant new investment. It is all rather like giving someone suffering from hypothermia a cold shower to spruce him up. I hope that those and other points will be addressed in Committee.
This Bill is fraught with dangers, but there are no convincing benefits to passengers. Rarely can a Bill have had such widespread opposition. Even a former Government Chief Whip has been reported as saying that he would not fancy taking it through the House. No one would condemn the Secretary of State if he were to change his mind at this stage and turn back on the very verge or the brink of disaster. We understand that they have to look over their right shoulders and convince everyone that the Thatcherite march goes on, but surely once Lord Ridley of Liddesdale had said that it was impossible, that rather got them off the hook. Surely the Secretary of State could walk away from this experience, if he were to abandon it, with his reputation as a pragmatist intact and the brief period of sanity that he was supposed to have brought to the Education Department between the reforming zeal of the right hon. Member for Mole Valley (Mr. Baker) and the right hon. and learned Member for Rushcliffe (Mr. Clarke) soundly underlined, but if he ploughs on, despite all the ill omens, his name will go down alongside that of Beeching and he will be regarded as the harbinger of ghost trains on a skeleton service.

Mr. John Horam: There are two things, amid the disharmony, that we could agree on in this House—that a good railway service depends on an appropriate level of investment and on good management. On the question of investment, my right hon. Friend and his colleagues have begun, in the past two years, to hit the right note. The current levels of investment are higher in real terms than they have been, I think, since the late 1950s and early 1960s. I commend my right hon. and hon. Friend on that. In addition, they have now begun to relax the rather narrow Treasury rules governing the financing of public sector infrastructure, and that is all to their credit.
However, as we know, good investment is totally wasted if it is not accompanied by good management. Eastern Europe is a monument to the follies of huge quantities of investment that have been totally ruined by ludicrously bad management. The problem with British Rail management has been rightly diagnosed by my right hon. Friends—that the culture has been wrong. I do not think that there is a lack of good managers and good staff in British Rail but simply that the framework in which they are forced to operate does not encourage innovation and rigorously high standards.
They are therefore right to privatise British Rail and right to do it by the method of franchising because that breaks down the system into more manageable units and gives tenderers and frachisees a specific period in which to prove their competence or they, too, will be out on their ears. It is sensible from the size point of view and sensible to introduce that kind of competition.
I therefore support the basic strategy, and I support the Bill. If that was all there was in the Bill, I would be 100 per

cent. behind it, and probably would not even be bothering the House by speaking today, but would just be voting in the Lobbies. Unfortunately, that is not all that is in the Bill. In addition to the fundamental change of franchising, the Government have also thought it right to bring in a second major revolution in railway thinking—to separate the operation of the track from the operation of the trains.
Even if that were a good idea, it would have been unwise to introduce two ideas of that enormous size at once. Governments have habitually underestimated the difficulties they cause to people who manage the systems by bringing in huge amounts of change which they can scarcely cope with.
We have had that problem in electricity, for example, where the law of unintended consequences has operated with massive effect and we have also had it in other areas in the public sector such as education. The Government should have been wary of that.
Is separating the track from operating the trains a good idea? I heard what my right hon. Friend the Secretary of State said today and I must say to him that it is the first considered justification of separating the track from the trains that I have heard from him. There was not very much in the White Paper, but I will listen and I shall study what he has said.
My problem is that, for the past 10 years or so, I have not been in the House but have been managing companies. I know from that experience that one of the first requirements of getting a sensible management system is that people should be able to control all their costs. They must have as much as possible of the environment in which they operate within their own sphere of control so that they know what they are doing. That is the right way to release what Keynes called the "animal spirits" of the entrepreneur. He must have confidence that he can control his costs.
The fact is that, under my right hon. Friend's proposals, because Railtrack exists and will have its own costing regime, about 40 to 45 per cent. of an ordinary operator's costs will be determined by Railtrack—indeed by Mr. Bob Horton, who is a refugee from the private sector, with a reputation as a very hard man. That is not a regime I would be very happy with if I were a franchisee.
Imagine what would happen if, under these new proposals, there was a drop of revenue of the kind there has been on Network SouthEast over the past two years—of 9 per cent. The franchisee will not then be in a position to defer a bit of investment on a new line, or to defer maintenance, and thereby keep the running of the trains roughly consistent with what they are today. He will not have that option. Therefore, train services will be slashed, customers will be deterred and we shall get into a vicious circle of spiralling decline in services. That is the sort of thing I am concerned about.
One thing one must do as a good manager is to try and install a "no excuses" regime. By that I mean that one gives a manager responsibility for delivering a service and no excuse for not delivering one.
Sixty per cent. of the faults or failures in a normal railway system are a product of track and signalling and not a product of the operating of the trains. The first thing that will happen when things go wrong is that they will blame Railtrack. In addition, they have to meet the citizens charter, and are under a legal obligation to do so.
The second event, therefore, after blaming Railtrack will be to issue a writ against Railtrack for not delivering


a proper infrastructure service. So we are in to a whole area of legal wrangling. A huge number of legal contracts will have to be introduced as a result of this separation of powers and the number of franchisees. I have been told that there are likely to be 14,000 separate legal contracts as a consequence. That is huge and unnecessary complexity.
In addition, there is the bureaucracy. My right hon. Friend always makes the point in speeches that the sort of bureaucracy he is proposing to set up is already mirrored inside British Rail, and we cannot see it because it is inside that large organisation. That is not a good argument; it is one thing to reach agreement with somebody in another division of the same company but a wholly different matter to reach agreement over dividing revenue with a totally separate company which is legally separate and when there will be huge competition between the two.

Mr. Milligan: My hon. Friend makes an interesting point about the problem, but has he studied the experience of Sweden, where they have done exactly this? The latest issue of the Railway Gazette says that productivity on Swedish railways is three times higher than on British Rail.

Mr. Horam: I do not think that Sweden is a sensible comparator. It is a huge country, with a small amount of rail track. This is a very complex system we are dealing with, and it is the complexity that concerns me. I am concerned not with the theory but with the practicalities. There are theoretical arguments for separating train and track—I fully accept that. In fact, when I was a Transport Minister from 1976 to 1979, we considered separating track and trains but rejected it for those reasons—on the grounds that it would not work.
Finally, the other danger is sheer uncertainty. Uncertainty will deter finance, and that will have a bad effect on investment. We are already seeing the consequences of that on the railway equipment industry. It is all very well for the Government to say that they are right behind manufacturing industry and are trying to help, but in other parts of their huge empire they are having a dreadful effect.

Mr. Nick Hawkins: rose—

Mr. Horam: No, I have already given way once.
I should like my hon. Friend to consider these matters most carefully. He is already beginning to do that. It is quite clear that many final decisions have not been taken involving the most important parts of the Bill, and one can see that he intends to treat it as a flexible framework rather than something which is cast in stone.
I also noted what he said about the limitations of open access and the possibility of vertical franchising, but I should like him to go further in that direction. It is right that there should be some franchising, and I have no quarrel with the announcements today, but I should like more to be in the control of the franchisees. I should like my right hon. Friend to give them time—three or four years—to see how it works in practice before making further concessions on franchising. I should also like to see guarantees on investment, so that the railway equipment industry can be assured of a future.

Mr. Deputy Speaker: Order. Dr. John Marek.

Dr. John Marek: If the hon. Member for Orpington (Mr. Horam) really means what he is saying, he should have the courage of his convictions and vote against the Bill. It requires only 12 hon. Members—and I can tell that more than 12 Conservative Members have doubts about the Bill—to put the Secretary of State out of his misery.
I am afraid that the Secretary of State was gabbling when yet again he talked about the Networker and five-abreast seating instead of four-abreast seating, which is what used to exist on the north Kent line. He talked about investment being at its highest ever level, but he conveniently neglected to say that half of it was for the channel tunnel, that much of it was already committed and that the extra was extremely small.
The Secretary of State must know that the chairman of British Rail does not agree with privatisation. Before the hon. Member for Fylde (Mr. Jack) takes me to task, I must say that I am sponsored by the RMT, the National Union of Rail, Maritime and Transport Workers. The workers in the industry do not agree with what is proposed in the Bill and nor do the experts. The Secretary of State mentioned leaders of industry such as Mr. Sherwood, but I do not think that the real experts agree with what is proposed.

Mr. Hawkins: Will the hon. Gentleman give way?

Dr. Marek: I will not give way, as I have only 10 minutes. It is one of the problems of limiting speeches to 10 minutes, and I apologise to the hon. Gentleman.
The public certainly do not agree with privatisation, and the civil servants in the Department of Transport do not know much about it, as the Department is heavily road-oriented. As an example of that, the document entitled, "Railway Privatisation:—A Voice for the Passenger" has on its back cover a map of the railway system which has completely forgotten the Wrexham to Chester railway. The Shrewsbury to Wrexham part is there, but not the rest. That is typical of what we get, simply because the Government do not rate very highly the railways and railway investment.
The only ones in favour of privatisation are the Secretary of State, the cheap and cheerful Minister sitting next to him and some right-wing Members who agree with the proposals. So why will the Bill go through? Basically, Conservative Members, with a few notable exceptions, do not use the railway system. They are more interested in claiming 68p a mile and using their 2000 cc cars to get to London. I would be quite happy if the Fees Office published a list of those who claim 68p a mile to get to this place. The country would like to know; then people would be able to judge those who support the Bill. By and large, the people who will vote the measure through this evening are hon. Members who do not use the railway system.
Let me say what I think will happen. First, it is clear that railcards will disappear. The Secretary of State has as good as said so this afternoon. The hon. Member for North Devon (Mr. Harvey) is quite right to say that we need a national timetable with good connections, but I fail to see how we will get that if the demands on making a profit mean that a connection will be missed. Will there be a regulator to say that a train will have to run five or 10 minutes late in the interests of a national timetable with


good connections? I do not believe that will be the case. We may have a national timetable, but good connections will depend on luck.
We will have through ticketing, but will that, be at discounted fares? Again, the Secretary of State has as good as said that through ticketing will not be possible at major ticket offices. If a travelling guard can issue tickets, will that guard be able to issue through tickets as at present? I very much doubt it. That is another potential loss to the public resulting from the Bill.
Will there be a common set of conditions of carriage, or will the Secretary of State vary it for any particular franchisee encountering special difficulties, and apply special conditions? Will train service frequencies be retained, and will we still have evening and Sunday services so that any member of the public can travel anywhere in the United Kingdom, knowing that there will be a reasonable train frequency so that, although it may take a little longer than normal, they can reach their destination? I very much doubt that. I believe that evening and weekend trains will disappear.
Will there be national information and seat reservation systems? I very much doubt that, if there are to be different franchisees, all varying their timetables without notice, just as occurs in the present deregulated bus system.
What about access for disabled people? Will the Bill applying to rolling stock include a set of conditions which will guarantee and preserve the advances that have been made in access for disabled people to the railway system?
What will happen if a franchisee goes bust? If I turn up at the railway system and the franchisee has gone bust, or if that franchisee has only a few wagons or engines, or if the driver has not turned up because he had an accident on the way to work, or if there is a fault with the engine so that my train cannot run, will it be a case of: "Hard luck, mate—come back in three or four hours and we will try to get it repaired"?
I know that British Rail is not perfect, but, by and large, if I turn up at a railway station, I know that the train will run, or, if it does not, if the delay will be more than an hour or so, British Rail will put on alternative bus services. I do not believe that will happen under the Bill. There will be fewer staff on station platforms securing people's safety, especially at night. Staff cost money, and that eats into profit.
If the Government privatise rolling stock, will the quality of build be maintained? As we all know, there will be no build in Britain, as the manufacturing industry here is about to go bust, but will the orders and specifications placed for that rolling stock be up to the quality and strength of that which we have today?
My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) was far too kind to the Government when he spoke about safety. Between 1980 and 1985, the Government made conditions applying to level crossings easier, so that British Rail could spend less. The effect was to allow car drivers to kill themselves, until the disaster near Hull when the Government finally saw common sense. The Government deliberately loosened conditions at level crossings to save money.
As British Rail has been forced into privatisation, there are bound to be arguments about platform space and about whether the platforms are owned by Regional Railways, a franchisee or by InterCity. If there is a delay or something goes wrong, and a train has to use a platform that is not part of the franchisee's domain, extra charges

will have to be paid, as happens now between Regional Railways and InterCity. The franchisee may say that, as passengers have to wait only 12 minutes or thereabouts, they can wait outside the station to avoid the extra cost. That is what bringing accountants into the service would do.
Unfortunately, we have the worst Government this century; there is no doubt about that—[Laughter.] Conservative Members are laughing, but only one or two of them. We have the worst balance of payments crisis that I can remember, and the worst public sector borrowing requirement. Indeed, the PSBR is worse than it was in 1976, when we suffered an oil price rise, and now we have the benefit of North sea oil.
According to the official figures, 3 million people are unemployed, but really it is more like 4 million. We also have a clapped out railway system; time and time again, I am amazed at how it manages to run. We spend 0.14 per cent. of GDP on rail, whereas Germany spends 0.57 per cent. and France 0.61 per cent. The Government are in no position to put it right, and the Bill does nothing to put it right. I appeal to 12 Conservative Members to put the Government and the Secretary of State out of their misery at 10 o'clock tonight.

Mr. Henry Bellingham: The hon. Member for Wrexham (Dr. Marek) mentioned that there were few Members on the Conservative Benches, but 18 Conservative Members are taking an interest in the debate, and only eight Members of the official Opposition are in the Chamber, so perhaps he can learn to count.
I intend to ask why we should privatise British Rail, comment on how we should do so and on some aspects of the Bill, and refer briefly to freight services to King's Lynn.
I was taught to subscribe to the dictum "If it ain't broke, don't try and fix it." However, it is broke—the whole culture is anti-consumer and we are talking about attitudes that look back to the 1960s, rather than forwards. That is why the Government could not stand still and do nothing, but had to move forward with the Bill.
I shall not dwell on the reasons, as they are self-evident. I like the Government scheme and its structure, because it is evolutionary, imaginative and highly flexible. However, I have one or two small nagging doubts, which I shall express briefly. First, the offices of director of franchising and regulator are to be set up. I have studied the Bill carefully, and listened with care to my right hon. Friend the Secretary of State. I do not understand why those two offices could not be combined. Surely that would be a pragmatic and sensible step forward, and I urge the Secretary of State to consider it.
My second doubt relates to InterCity. British Rail was told to be more responsive to the public's requirements, to be more aware of what the punter wants, and to run a service for the benefit of passengers and not for the benefit of staff. To a certain extent, InterCity has achieved those aims. It has a successful brand name, and I would be sad if it disappeared. I understand the Government's argument, that they do not want to sell a vertically integrated company, but surely we could keep the brand name.
I would have preferred the option of privatising InterCity outright. My hon. Friend the Member for Orpington (Mr. Horam) mentioned the advantages of the


operator controlling costs, and I think that that has additional advantages. Also, the attractions of vertical integration are obvious if we want to get private sector capital into the infrastructure.
For example, it is apparent that delays can take place during electrification—the line to King's Lynn was electrified—and a close interface between the track infrastructure and rolling stock is required. If too many factors were outside the control of the operator, there could be disincentives and disadvantages to electrification. We must bear in mind that InterCity has to compete with other modes of transport. An operation that has 8 per cent. of journeys of more than 50 miles has only a very small segment of the market, and we want that share built up.
So far, we have been talking about two franchises being offered for InterCity. If the same organisation were to bid for both, I should like the Minister to keep open the option of a vertically integrated company, which would also own the infrastructure. It would be sad if that option were not kept open. I see that my hon. Friend the Minister is nodding, and I should like him to comment on that. The most important thing is to allow the very successful InterCity brand name to remain in existence.
Although I have been critical, I welcome the proposals, and I think that franchising will work. It has been carefully thought out. People say that it has not been given enough thought, but the Department has been considering the proposal for two and a half years, has consulted every possible organisation, has studied the matter carefully and has come up with proposals. Few Bills have had more work put into them. That is why the proposals can and will work, especially for the loss-making lines in Network SouthEast and Regional Railways.

Mr. Hawkins: Will my hon. Friend give way?

Mr. Bellingham: I cannot give way, because of the 10-minute rule.
Those lines need an injection of private entrepreneurial flair and private investment, and my goodness we will get it.
Yesterday, I learned—much to my dismay—that British Rail has terminated the link to Boston docks. I do not know the details, but King's Lynn docks uses the railways to shift roughly 150,000 tonnes of coal and 50,000 tonnes of urea a year. Also, Dow Chemicals uses rail freight distribution to shift about three or four wagonloads of hazardous goods each month.
British Rail and Associated British Ports are in negotiations on the future of train freight haulage of coal from King's Lynn docks, and I understand that the negotiations are not going very well. The manager of the docks has told me that he has come up against a thoroughly negative attitude on the part of British Rail, which has insisted on a 15 to 16 per cent. increase in tariff. The dock operators have said that they will run the shunting loco and take on ancillary operations, but British Rail has a negative attitude.
If I brought the manager of Associated British Ports in King's Lynn to see the Minister, would he be prepared to discuss the matter with him and explain the impact of today's announcement on freight and how it could present opportunities for King's Lynn?
I welcome the package of four measures that the Secretary of State announced, because it could save the link to Boston.

Mr. Wilson: rose—

Mr. Bellingham: I cannot give way, but perhaps we can talk in the Lobby afterwards—[Laughter.]—if the hon. Gentleman comes to our Lobby.
We must try to ensure that the eight or nine wagonloads of butadiene—a potentially hazardous commodity—that are transported each month remain on the railway. British Rail told Dow Chemicals on 25 January that the service would be terminated. If the negotiations between ABP and British Rail on trainload freight for haulage of coal collapse, the rail freight distribution service to King's Lynn and the link to the docks could be put in jeopardy. Given British Rail's thoroughly negative attitude, I hope that the Minister will agree to meet that delegation, and that the four proposals announced today will have some impact. I am sure they will.

Mr. Freeman: I hope that I shall be in the same Lobby as my hon. Friend tonight. In case I do not have the chance to talk to him, I assure him that I look forward to meeting his constituents from the docks. Also, I can assure him that I shall shortly be meeting the director of InterCity to talk about the retention and development of the brand name, even within the franchising regime, and to confirm that we have taken no long-term decisions about the future of InterCity.

Mr. Bellingham: I am extremely reassured by that.
If the Minister thought that I was being critical, I hope that he deemed it constructive criticism, because what I particularly welcomed in the Secretary of State's speech was his description of the proposals as evolutionary and imaginative. The Secretary of State also said that, if changes were proposed in Committee, he would consider them and listen carefully and, above all, that he would try to ensure consensus throughout the industry to bring these difficult, imaginative and challenging plans forward.
If the Minister has perhaps sensed today that there is some opposition on the Government's side—my hon. Friend the Member for Orpington made it clear that there were parts of the Bill which he did not like, as did my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley)—I would urge him to stand firm. I am reminded of a quotation that I think came from Lord Jenkin back in the 1960s: "The time when people start to doubt your policy is the very time when you should strengthen your nerve and see it through."

Mr. Alan Williams: I thank you, Madam Deputy Speaker, for giving me, as an hon. Member sponsored by the Transport and Salaried Staffs Association, an opportunity to take part in the debate.
Sadly, history is not on the Minister's side in the case that he is trying to argue. The private owners could not believe their luck when, in the first world war, the Government took the industry off their hands; and there was an outbreak of mass panic when, after the war, the Government suggested that they should take it back again. The Government had to introduce an Act to set up the old LMS, LNER and GWR to take on the industry, which then tottered through the inter-war period and was on the


verge of collapse when it was again taken over at the start of the second world war. It is not generally realised that some of the old GWR shareholders are still deriving dividends under the arrangements made for the takeover at that time.
The Secretary of State asserted that the proposal is in the interests of both the consumer and the taxpayer. He went on to quote precedents from other privatisation measures which he felt proved his case. I point out to the House that in each privatisation measure the Government have used rather different initiatives to ensure that any advantage goes not to the consumer or to the taxpayer but always to the new shareholders.
In the gas industry prices were put up 10 per cent. a year above the rate of inflation for three years to give a 33 per cent. cushion to guarantee profitability for the industry and higher prices for the consumer. Jaguar was allowed to remain in public ownership by this Administration until the taxpayers' investment programme was completed, and then the profits were privatised. Sadly, it then gradually slipped into its old ways and had to be taken over by Ford.
In the case of the electricity industry, although the Government claim that they got £8 billion from the sale of the electricity industry, as the hon. Member for Orpington (Mr. Horam), who served on the Public Accounts Committee will know from the report that we undertook, only £5 billion of that came from the shareholders; the other £3 billion came from an artificially created debt which was imposed on the industry and then taken from the industry which had had prices set at a level that would recoup the debt. So we had the anomalous situation that the customers who had previously owned the industry now had to pay £3 billion by means of their prices to help someone else acquire the ownership of the industry.
The most outrageous example, however, was the water industry. It demonstrates the sheer nonsense of what the Government are willing to consider in order to favour the shareholder and private enterprise. In this case, £35 billion of public assets were sold for £3.5 billion. Ten companies were sold for the price of one. The Government wrote off £5 billion worth of debt on which the taxpayer was obtaining interest, gave £1.5 billion of public money—which cost the taxpayer interest—as a donation to the industry, and then gave it £7 billion worth of tax write-offs to ensure that it would not have to pay any tax for most of this century.
The cumulative result of this package—the lost interest on the write-off, the lost interest on the cash injection and the exemption from taxation—is that within about five years all that the Treasury gained from the sell-off will have been given back, and the industry will have been given away for absolutely nothing to people who will go on creaming profits from the public. So while the idea that privatisation is some great initiative on behalf of the consumer is fine on the political platform, it does not bear close scrutiny.
I wish that the Secretary of State were still here. I have sparred with him for many years and I have a great regard for him, but this is the first time that I have heard him venture into nonsense arguments. It is a new departure for him but one that he undertook with his customary charm and giving the impression of greater experience than we all know he has had in that respect. The thought that worried me towards the end of his remarks was that he might be beginning to believe some of the arguments that he was putting forward. But I know him better than that, and I

am sure that if he comes to the Committee our old confidence in him will return, because he knows as well as we all do that the railways were always cross-subsidised, even in his good old days of private ownership. The trunk line subsidised the feeder lines. As far back as Beeching, under public ownership, the branch lines cost 40 times as much per passenger mile as the trunk lines. There has always been cross-subsidy.
I urge hon. Members to consider this matter from their constituents' point of view, particularly those who represent commuter areas. If, instead of that cross-subsidy going into the rest of industry, it goes in dividends, it means that we need not just the same subsidy; we need more subsidy, more taxpayers' money, in order to sustain the present level of services. Yet all we have had is an assurance that subsidies will continue. There has been no indication of the level at which they will continue. It is no good their staying constant because we all know that, with the inevitability of inflation—I am not making a political point; inflation has been a feature of any society for most of the century—if the subsidies were continued but frozen at one level, they would wither in real terms. So either the burden would pass to the farepayer—and it is doubtful whether the market could bear it—or there would be cuts in services or lines.
All this is ominous for those of us in south Wales who depend on our valley rail services for commuting and those who depend on the central Wales line, the mid-Wales line, the north Wales coast line and so on. Even on the 125 line to my constituency there are doubts about what will happen to the service between Cardiff and Swansea if the proposal put forward by the Minister goes ahead. We are fearful that there may be cuts in that service.
Safety is of crucial importance to the public. I was pleased that the Minister said that he regarded it as a high priority. The trouble is that Ministers do not last long in the Department of Transport, and one Minister's reassurance might not even be valid by the time the Bill finished its journey through the Committee. They tend to be rather high-speed travellers as they reach the Cabinet via that Department.
I was somewhat horrified to read in The Independent yesterday the headline:
Major urged to halt spending on rail safety".
A former director of the Thatcherite Centre for Policy Studies, now the hon. Member for Havant (Mr. Willetts), was quoted as asking,
How can you spend over £200 million a year on rail safety and increase transport deaths?
He was reported as saying that
by forcing higher spending on rail safety, passengers were being driven on to the roads by higher fares, where the risk of death was almost five times greater.
He also said that the Prime Minister
might also call for a moratorium on implementation of all further rail safety requirements".
That is horrific nonsense. Instead of the train taking the strain, the train will take the risk if the hon. Member for Havant has his way.
It used to be an axiom of economics that, if one had two competing services, one tried to invest to the point where the marginal rate of return on each was equal, which resulted in optimum investment. Now a right-wing Conservative Member says that we should disinvest to the point where the marginal rate of accident is equal—a peculiar proposition to make. Why did he not suggest that we should invest more in road safety? Why did he support


the deregulation of the bus services? If the railways are that much safer, why does not the hon. Gentleman come into the Lobby with us tonight? I hope that he will.

7 pm

Mr. Robert Adley: I pay tribute to the memory of the late Sir Peter Allen, who will have been known to some of my colleagues in the House. I read in his obituary in The Times that, like me, he was a railway and steam train enthusiast. Like me, he would be described by my colleagues on the Front Bench as eccentric. Unlike me, he was chairman of ICI. Quite a few people are concerned about the Government's proposals—Sir Peter Allen certainly was.
Where should we start? Why not start at the point that we have reached today. The damage caused by the very threat of the Government's proposals is already evident. Rail freight is haemorrhaging away. My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) should ask British Rail why it has vastly increased its prices. He might find that its answer provides the answer to many of his questions. Private sector manufacturers of rolling stock are in crisis because British Rail is unable to place orders. My hon. Friends insist that that has nothing to do with the Government's proposals, but everyone in the private sector knows that it is directly related to them.
Who is in favour of the proposals? The Centre for Policy Studies is, of course, and the Adam Smith Institute would claim that it invented them. My right hon. Friend the Secretary of State is in favour of them and some of my colleagues, particularly new Members of Parliament, have already expressed their enthusiasm. They would probably want to privatise everything—it will probably be the Army next. The prime architect of the Bill, Sir Christopher Foster, has not figured much in our deliberations. He was the director-general of economic planning under Barbara Castle in the Ministry of Transport between 1966 and 1970, and this is largely his Bill. He was the inventor of the freight integration council, among other things. If that does not frighten my hon. Friends, it certainly should.
Who is opposed to the Bill? We know that millions of our fellow citizens are. Those who use the railways, such as the Confederation of British Industry and its commercial members, oppose it. The transport users consultative committees, appointed by the Government to look after passenger interests, oppose the Bill, as do those who run the railways, those who work on them and those who build the rolling stock for them—to name but five groups.
In 14 years of Conservative Government we have seen fluctuating investment on the railways, reductions in the public service obligation grant and consequently numerous customer complaints. The Bill has been introduced as a means of alleviating those complaints. There has been a total lack of any coherent transport policy during the past 14 years, which has caused the problem. The hostility of the Government under Lady Thatcher to anything in the public sector forms the background to today's Bill.
We have had no discussion—nor is there anything in the Bill—about the road versus rail argument. When the CBI appeared before the Select Committee, it gave interesting figures. My hon. Friends who intervened in the speech of my right hon. Friend the Secretary of State might read the statistics in Hansard. On a dollar-per-head

basis for the latest years for which figures are available, rail investment is as follows: in the United Kingdom, under $7; in Germany, $24; in France, $37; and in Italy, $50. Is it any wonder that complaints are made here about railway services while there are comparatively few complaints among the customers of our continental partners in Europe?
From where is the investment to come for Railtrack? Who is to finance the new railway? There is no mention of any investment regime in the Bill. Investment is fundamental to the success of a railway. My hon. Friend the Minister of State has already confirmed that there is a direct correlation between new investment and satisfied customers on the Chiltern line. That is how to build a successful railway.
Some of the similarities between the Railways Bill and the Bill to privatise electricity should provide a warning to some of my right hon. and hon. Friends. The problems of the coal industry today are the direct result of the way in which the electricity industry was privatised. If one looks at the phraseology of both Bills, one can understand why some of us are concerned about the Railways Bill.
The Bill contains a fundamental flaw which has been touched on by all those who have spoken so far. It separates responsibility for track and signalling from the operation of trains—a recipe for endless conflict. What would have happened in the recent crash at Borough Market junction if the two trains involved had been operated by two different companies? Each would blame the other for everything—and both would blame Railtrack. Some of my constituents were killed in the Clapham junction rail crash. Within hours, British Rail accepted responsibility. Would a private sector company immediately have accepted responsibility for a crash involving one of its trains? Of course not.
Vertical franchising is the demand of the private sector and of almost all the companies which came before the Select Committee. My hon. Friend the Minister of State nodded as he listened to the suggestions of some of my colleagues who stated that complete vertical franchising should be considered. It is clear that the creation of a track authority and the surrounding paraphernalia is at the heart of the Bill's proposals. There is no point in pretending that vertical franchising—other than in the Isle of Wight—is for the Secretary of State anything other than a dream.
Who will provide the long-term funding for all the franchisees? They are being encouraged to invest money for 15-year franchises. Has my hon. Friend the Minister received permission from my right hon. Friend the Chancellor to provide guaranteed funding at constant levels for 15 years? Will the Chancellor be in place for 15 years? Will there be a Conservative Government in 15 years' time? Relying on a public sector rail track for infrastructure and the vagaries of the Treasury to provide guaranteed subsidised funding for private sector operators for all those years forms an unlikely scenario—[Interruption.] My hon. Friends must make their own speeches.
I have heard too much about breaking up. I am not in politics to break things up—I am in politics to build. We are breaking up the national railway system and replacing it with a vacuum. It will be a lawyer's paradise. We are legislating not for deregulation but for reregulation.
Safety has been mentioned. The more people who are involved in safety, the more safety is jeopardised. The


proposals contained in the Bill are a recipe for muddle, indecision and conflict. Like everyone else in the House, I want a better railway, but the Bill is a clear illustration of the muddled thinking in the Department of Transport. It illustrates the conflict of private sector ambition versus public sector obligation. To satisfy the former, it will be necessary to diminish the latter.
Where do my right hon. Friends stand on the conflict between the ambition of the private sector to make profits and the obligation on the public sector to run a full railway system efficiently? The Bill is a laboratory experiment conducted by civil servants in Marsham street with a vital piece of our national transport infrastructure.
My hon. Friend the Member for Eastleigh (Mr. Milligan) talked about Sweden, where the Government are making 45 per cent. additional infrastructure investment a year for 10 years and Sveriges Järnvägen—the state railway—has gained 99 per cent. of the contracts to run trains. Here British Rail is forbidden to enter the competition and there is absolutely no investment regime in the Bill.
I shall finish with a quotation from an unusual source—the new ambassador from Saudi Arabia, Ghazi Algosaibi, formerly the director of railways in his country. He wrote to me yesterday and mentioned the theory of privatisation. He said:
Any service that is deemed so essential that it requires subsidy is, by definition, not suitable for privatisation. Railroads belong in this category. Railroads were in my time, and remain today, heavily subsidised by the government. Under these circumstances privatisation makes no sense. If you stop the subsidy, the service will deteriorate and might terminate. If you continue with the subsidy, the whole thing becomes an exercise in futility!
That, I fear, is where the Bill will lead us.
We all know that BR is far from perfect and there are many ways of improving it. I want to see the private sector brought in, initially by ending the freight monopoly, but it seems that my right hon. Friend has rejected that proposition.
I just say this to my hon. Friends. If the size of their majorities is bigger than the number of rail users in their constituencies, they should not have too much to worry about. We are here at Second Reading. It is glad confident morning today. The Bill is born of dogma, conceived in theory and adjusted in the Whips Office. I am sad to say that, like my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley), I cannot support the Bill on Second Reading.

Mr. Keith Hill: It is a privilege to follow the hon. Member for Christchurch (Mr. Adley), who has spoken for every informed observer of the Government's proposals. Can any Government have launched a major piece of legislation amidst more general criticism and more misgivings from the professionals who are supposed to make it work than the Government in their rail privatisation proposals? Even the poll tax had its enthusiasts. This poll tax on wheels has no enthusiasts whatever.
Let us be charitable to the Government in their embarrassment. Let us assume that rail privatisation is not merely, as seems likely, the last confused spasm of a worn-out Thatcherite ideology. What then was the problem that the Government set themselves to resolve in evolving their present proposals? Was it the creation of a

less bureaucratic railway? Hardly that. The Government are planning a positive quagmire of quangos to run the railways. It will be a bureaucrat's fantasy and an operator's nightmare.
Was it the creation of a more efficient railway? Not that either. On top of the quangos, the Government are proposing a split between infrastructure and rail operation with cuts across every principle of modern railway practice. It will prove a minefield of day-to-day conflicts between operators and the track authority and a prescription for endless litigation.
Was it the creation of a cheaper railway? Hardly that either. What hopes for lower fares with no guarantees on subsidy, with Railtrack under instruction to secure a commercial rate of return for every line that it runs and with operators seeking to maximise their profits also?
Was it the creation of a sharper, more entrepreneurial style? Where would that come from? Would it come from the bus operators who have managed to lose 13 million passenger journeys a year since bus privatisation in 1985? Would it come from Mr. Branson, who wants to spruce up old diesel locomotives to run at lower speeds on a newly electrified east coast main line?
The deep irony is that the Government's best hopes for a new management appear to lie in buy-outs by the old managers of British Rail—the very last group, I should have thought, that Conversative Members would want to see running the railway for them.
But, lo and behold, where are the profits to be made by the new thrusting entrepreneurial style? The Secretary of State has confirmed it today—by privatising the very services where profits are already being made. I shall believe the privatisation of the London-Tilbury-Southend line when I see it.
Was the Government's aim the creation of an expanding railway, better equipped to play a larger part in meeting the environmental, social and economic needs of the nation? Certainly not that. Scour the pages of the multitude of consultation documents flowing from the Department of Transport; listen to the words of the Secretary of State; examine the Bill. Where is the strategy? Where is the thinking about the future role of railways in the nation's transport system? Vision is the last thing that we have heard from the Government in relation to rail privatisation.
The truth is that the Government's proposals are the wrong answers to the wrong question. The fundamental question is that of investment—investment which is already too low and is in danger of becoming yet lower under the Government's proposals.
We have become used over the years—we have heard it again today—to a constant barrage of complaint and criticism about British Rail's performance. Yet the most singular aspect of British Rail is not that it all too often performs badly, but that it manages to perform at all. It is about time that Conservative Members recognised just what British Rail has achieved in sustaining the network and in maintaining a service when it has been so grossly underfunded for so many years in comparison with similar railways elsewhere.
Britain spends a third of the cash spent by France on its railways and a quarter of that spent by Germany on its railways. In subsidy by head of population, we spend one fifth in comparison with France or Germany. No wonder we have higher fares and less reliable services. Yet in all international comparisons of railway productivity, BR


appears high in the rankings. That is a remarkable achievement, given the low levels of investment in the system.
The Secretary of State never tires of telling us that investment is currently at record levels, and, of course, he is correct. What he omits to point out is that in the early 1980s under this Government we had the lowest continuous levels of investment in the railways in any period since the 1920s.

Mr. Michael Stephen: Will the hon. Gentleman give way?

Mr. Hill: I will not give way in view of the strict time limit. I should love to do so in normal circumstances.
Without the significant increases in the past two or three years, we would not have had a railway in any recognisable form. However, it was too little too late. For all the Secretary of State's protestations, that investment will not be sustained. Next year, investment in the existing railway will fall to half this year's level. It will remain below this year's level to the end of the current programme in 1996.
Already, InterCity has no rolling stock investment plans or refurbishment plans for the next five years. Already Network SouthEast is operating with an estimated infrastructure budget shortfall of £200 million. The railway supply industry has no orders on its books beyond 1995. Its representatives told the Transport Select Committee that the industry, responsible for 50,000 jobs, faces annihilation. Only last week, Lord Prior, on behalf of GEC Alsthom, a major railway supplier, told the Select Committee that unless more orders are forthcoming no industry will be left in three years' time.
I say this to the Government in all seriousness: there is an immediate crisis of underinvestment in the railway industry. Even if their privatisation plans succeed in creating new investment demands, which I doubt, they are unlikely to come on stream for several years. Therefore, the Government should urgently undertake to provide at least steady levels of state finance for the first five years of privatisation in order to protect the quality of service and to maintain a rail manufacturing base.
Of course the Opposition accept that there is a role for the private sector in rail investment. We have looked at the experience of the nationalised French railways where all new major investment since 1990 has been funded by borrowing on the private market, including the City of London. We have looked at the experience of Japan where new capital projects are jointly funded by central and local government and by private finance raised by the still nationalised railways.
My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has repeatedly put forward proposals for leasing and joint ventures along those lines. The Government have rejected those proposals on grounds of dogma and, as we now learn, a totally antiquated set of Treasury rules. By contrast, the Government's proposals threaten to impede, not favour, the vital need for new investment in the railways. They will create an excessive and costly bureaucracy which can only serve to increase costs for operators and track authority alike.
The separation of track from operation will create a tangle of operational difficulties. Sensible railways

investment requires an integrated approach to infrastructure and operation, but that is absent from the Government's proposals. Those same arrangements mean that half the cost of running services—that arising from the infrastructure—will be outside the control of the private sector businesses. Railtrack itself—half the railway system—will anyway remain in the public sector and be subject to the current severe Treasury spending constraints.
That is not a hopeful scenario for generating new investment in rail. A railway renaissance is taking place throughout Europe. The Government will bear a heavy responsibility if, because of their current policies, this country does not share fully in that rebirth of rail.

Mr. Tim Devlin: I must first declare two interests. I regularly use the national railway system a minimum of five hours a week in travelling to and from my constituency. Sometimes, I use it much more than that. The present InterCity service, combined with a laptop computer, is one of the most congenial working environments available to a Member of Parliament. Also, if 14,000 new contracts are to be signed at the conclusion of our consideration of the Bill, there are several reasons why I, as a lawyer, may be tempted to be the first in the Lobby enthusiastically to support it.
More realistically, I address the House as the Member of Parliament for the constituency which was the birthplace of the railways and which ran the first successful privately owned railway ever laid down. To this day, one of the largest railway workshops in the country is to be found in my constituency. Furthermore, a regular complaint in my postbag concerns the coal that falls from viaducts in my constituency as it is transported from Durham to the south.
In his introductory remarks, my right hon. Friend the Secretary of State said that the east coast main line will be one of the first services to be franchised. It is instructive to look back at what was said about not only the east coast main line but the fortunes of the London and North-Eastern railway in the nationalisation debate in 1946. The LNER had emerged from the war having been extensively bombed—connecting as it did most of the airfields and industrial areas of Britain—and suffering from a long period of under-investment between the wars due to the recession that set in then. At the end of the war, there were extensive plans to renew the network and to develop new services and branch lines. With that in mind, the then Opposition voted against nationalisation because they anticipated, rightly, that instead of private companies competing for capital on the markets and applying it to worthwhile schemes, the national conglomerate—known as the British Transport Commission—would direct investment in a way that reflected its perception of national priorities, and often not do as good a job as the private sector.
In reviewing the history of the railways, I believe that I am right in thinking that British Rail has never constructed a new line.

Mr. Adley: I remind my hon. Friend of those serving Stansted and Manchester airports.

Mr. Devlin: I stand corrected. Those apart, British Rail has never laid a long line. It has, however, just completed


electrification of the north-east coast main line, and I would remind the hon. Member for Wrexham (Dr. Marek)—who is not in his place—that that is one service that gives the lie to the claim that it is apparently clapped out. I fundamentally disagree. The InterCity service is extremely good. That large-scale investment is an important factor in our consideration of the future, after the Bill is passed.
At the end of that process, the Government will have to demonstrate to the public throughout the country that there has been a significant improvement in the service that they receive. I do not believe that the public care one or two hoots about railway ownership. They care about being provided with a good, punctual service; clean carriages that are kept in reasonable condition; the operation of train services to proper timetables; and the ability to purchase tickets at different prices for various destinations.
Since the privatisation of the gas and electricity generating industries, both have attracted huge investment. If we want the same for the railways, we must make them as attractive as possible to private sector investors. The fact remains that there is not a railway in the world where competition operates on the same line. There are many places where there is competition between two lines. The history of LNER and of the London, Midland and Scottish railway shows that they competed with each other for passengers travelling to Scotland.
Today, British Rail competes with the car and, in the case of long-haul journeys, with air travel. The would-be franchise holder will be looking for a service that it can run economically, at a profit, and in competition either with cars or airlines.
I understand the argument of my hon. Friend the Member for Orpington (Mr. Horam), that the business man naturally wants as much control of the resources as possible. In that respect, I urge the Government not to pull back on privatisation but to go further. If we want to attract large-scale investment to the railways, we must offer the commercial opportunities that people want. At the beginning of the debate, my hon. Friend the Member for Christchurch (Mr. Adley) asked my right hon. Friend the Secretary of State whether an operator who wanted to buy and to operate a whole line on a vertical basis would be allowed to do so. So far, significantly, no answer has been forthcoming. That is an important aspect.
What would happen if an operator came to the marketplace and identified the potential for a new line, better market opportunities if it were to introduce new rolling stock, or more potential if the line were to be electrified? In each case, the operator would have to refer to Railtrack, and that new body—to provide the service that the operator wanted—would have to refer to the Government. That would mean a call on the Government's resources.
In that way, British Rail is different from previous privatisations, which went straight to the market. The whole rationale for privatising them was to take them out of the Government's expenditure queue. If the Government said no to such an application, or Railtrack had other priorities, a dispute would arise between the operator and Railtrack that presumably would have to be sorted out by the regulator.
That difficulty could be simply resolved. If the franchise holder that operated, say, the east coast line from London to Scotland decided that it could run the whole track much better than Railtrack, why should it not be allowed to buy it? In the history of the railways, we can find a perfect

model of private sector investment. When the Darlington and Stockton railway was first engendered in a pub in Yarm in my constituency and an agreement was drawn up, no one had to refer to another authority. Planning permission was granted, the line was built, and all aspects of the line came under the control of the Darlington and Stockton railway company.
A modern example is provided by British Airways—a loss-making operation that was turned into a profit-making company. It does not have to lease its aircraft from an aircraft authority. British Airways buys the planes that it wants, flies them to the destination it chooses and, apart from air traffic control, has total operational ability to do as it wishes.
I welcome my right hon. Friend's announcement that rail freight companies will receive up to 100 per cent. of track costs if there is a good environmental case for switching goods from road to rail. A good example of that can be seen in the Yorkshire dales. Until recently, a loss-making local railway line transported limestone from the dales to British Steel's plant on Teesside. That line—the Redmire line—was a distinct little entity which could have operated all by itself. I do not see why a Railtrack authority should be involved in such circumstances. Why cannot the operator buy the whole line and run it himself if he wishes?

Madam Deputy Speaker: Order. I call Mr. John D. Taylor.

Mr. John D. Taylor: Although this complicated Bill refers mainly to Great Britain, it is a United Kingdom Bill, some of whose clauses refer specifically to Northern Ireland.
I do not object to privatisation; I speak on that issue with an open mind. I judge the Bill mainly on the way in which it will affect people and public transport, and the way in which it will affect those of us who live on the periphery of the nation—especially those living in Northern Ireland and western Scotland.
Listening to the Secretary of State's speech, I could not but conclude that the best routes were being privatised and the worst were being left with British Rail. That is surely a dangerous step. I consider the railway system an important part of the United Kingdom's integrated transport structure, and I think it vital for us to maintain an efficient railway system throughout the nation. That will be particularly important to Scotland and Northern Ireland when the Eurotunnel opens at the end of the year. If we give away, or sell, the better lines—such as the Gatwick express line—British Rail, deprived of the profits, will have less money to invest in the poorer lines that it will retain. That will damage our overall railway structure. We are endangering the country by converting a public monopoly into a private one.
I am also worried by the Bill's possible implications for major railway projects which are important not only to London and its environs, but to the nation as a whole. What, for example, will be the implications for the new express rail link to Heathrow, or for the new link from the Eurotunnel to London—or, indeed, for the underground Jubilee line link with docklands? Will any of those three capital projects, which were important to us all, be affected by the Bill? Will the Minister also bring us up to date with the timing of the three proposals? So many different


thoughts are being thrown around by the press that we are now totally confused about whether any of them will proceed.
When we talk about railway systems in the United Kingdom we must not forget that we are now part of the European Community, which has its own overall transport proposals for the 12 nations. There is a limit to what we in the United Kingdom can do with our railways without the approval and support of the Community. Some of us may not like that, but it is the position; indeed, some investment in railway projects cannot proceed without the approval of the Community, and its investment of European funds.
The Secretary of State said that he had consulted the Secretaries of State for Scotland and for Wales. I noted that he had not consulted the Secretary of State for Northern Ireland: to our shame, the Northern Ireland Office had nothing to contribute, and we in Northern Ireland resent that very much.
Let me conclude by examining the Bill's implications for Northern Ireland and the west of Scotland. As the Minister will know, the European Community has a new combined transport network. A map illustrating the proposals for Europe shows the route to Liverpool, because the intermodal channel tunnel terminal will be at Seaforth. That will have important implications for us in the north-west and Northern Ireland.
What is the Government's stance on the ferry route between Liverpool and Belfast? British Rail selected it as the main route from Liverpool serving the whole island of Ireland, not just Northern Ireland; yet we now find that the route from Liverpool to Belfast is no longer shown on the map illustrating the European Community's proposals. Have the Government made any representations on the subject, and do they support British Rail's decision to recommend the Belfast-Liverpool route rather than the Dublin-Liverpool route as the main route to the island of Ireland?
Finally, let me deal with a subject well known to the Minister—the other major rail route serving Northern Ireland: the one that goes up to the west of Scotland, into Stranraer, across to Larne and down through Northern Ireland and the Republic. The route from Larne to Stranraer is the busiest between the whole island of Ireland and Great Britain: one third of freight from the Republic now comes up through Northern Ireland and Larne. That position will improve, because we are investing a good deal of capital in the route from Dublin to Larne. The European Community is helping us to modernise the line from Dublin to Belfast, and the Northern Ireland Office is investing massively in an inter-city link so that it will be possible to travel by train all the way from Dublin to Larne. The ferry system—and the ScotRail system, which is now to be privatised—will have more traffic as a result.
Back in 1991, we were told that a European Community committee recommended that the Dublin-Holyhead route should become the main route between Ireland and Great Britain, although the Larne-Stranraer route is the most popular with those involved in business and tourism. That was a most unusual decision. The vice-president of the Community, Sir Leon Brittan,

confirmed that in a letter on 9 January 1992. Later that month, the Minister for Public Transport stated in another letter:
the EC working group did not in fact present a further report on the high speed train network by the end of last year"—
that is, by the end of 1991, as had been intended. The Minister went on:
A number of studies have yet to be completed and …the aim is now to produce the report by the end of 1992.
Have the Government now received that report from the European Community?
In July 1992, Lord Caithness, Minister for Aviation and Shipping, wrote a letter referring to the
interim report produced in December 1990 by the European Commission …that has been considering the development of a European high speed train network".
He went on to say:
The Government would expect that any railway network maps proposed for the new group would show the Larne-Stranraer route as a link between the railway networks of Great Britain and Ireland"—
that is, the island of Ireland.
At the end of the year, the director of roads and transportation for Dumfries and Galloway regional council, Mr. Guy, said in a report that there was a reluctance by
ScotRail to improve the rail network in South West Scotland.
The report also highlighted the fact that
the West coast rail line within England and Scotland carried more freight than the East coast line, yet the latter had been earmarked by British Rail to receive greater funding to improve the route and to decrease travel times.
Although the west was busier, it was not getting the funding—that applied right up the west of England and into the west of Scotland. Mr. Guy reminded members of the Committee that
the shortest crossing from the island of Ireland to Great Britain was via the North Channel and that the majority of traffic used that route.
We ask the Government to clarify the confusing situation. Has the European Community working group made its final recommendations, and have the Government made firm proposals to Brussels that the Larne-Stranraer crossing and the railway system in the west of Scotland be preserved?

Mrs. Judith Chaplin: There is one matter on which the whole Chamber seems to be agreed, and that is the need for additional investment in the railways. What is not agreed is how that additional investment can be obtained.
In my constituency of Newbury, new rolling stock has recently improved the service. There are now also additional stops by InterCity on its way from the south-west to London and back. That has improved the line, but not nearly enough. We all agree that there must be far more investment in the railways. I accept that the Government have recently made a huge investment, and we all know that investment is the highest it has been for 30 years.
I very much welcome the commitment given by the Secretary of State in his letter to the Chairman of the Select Committee on Transport, my hon. Friend the Member for Christchurch (Mr. Adley). The Secretary of State said:
We agree on a need for continuing investment in the railway and a role of strategic investment.


The question, however, is how to get even more investment than the public sector can supply.
Some has already been supplied. For example, British Rail has been privatising its non-core activities for a considerable time, including British Transport hotels. It has also allowed private ownership of part of the railway—for example, by allowing people to run their freight wagons or locomotives on the railway or allowing private operators to run their own trains on the track. British Rail has also introduced private sector money by working in joint ventures, for example, using the many railway sites which became surplus to requirements.
The Opposition's method is always to demand additional borrowing. When the hon. Member for Kingston upon Hull, East (Mr. Prescott) was speaking, I was not able to intervene to ask what level the additional borrowing would reach. I should like to know what he thinks he could possibly rise to, given that we already have substantial public sector borrowing and debt that should not be increased. Also, we should certainly not increase the interest burden on the debt.
As always, the problem would have to be considered in conjunction with other priorities but, as always, the Opposition say that there must be more spending in every area for which public sector borrowing provides.

Ms. Glenda Jackson: Will the hon. Lady give way?

Mrs. Chaplin: No, not in the 10 minutes available.
What is vital for an improvement of the railway system is the direct introduction of private sector money. Of course, that is not possible at present because British Rail's borrowing ability is limited by the external financing limit.
Prior to the autumn statement, British Rail had the theoretical ability to obtain certain fixed assets under leasing agreements. However, under the rules that then applied, it was a theoretical rather than a real possibility because British Rail had to achieve at least good value for money in the public sector as if the assets had been purchased outright. The Government can always borrow more cheaply than the private sector, so that is very difficult to do. Furthermore, the full value of any asset leased before the autumn statement had to be set against British Rail's external financing limit. Therefore, the ability to seek private sector funds was extremely limited, which is why the changes in the autumn statement are so important for investment in British Rail.
One of the changes is that any privately financed project which can be operated profitably will be allowed to proceed. I see no reason why that should not encompass new lines. If an operator believes that he can provide a new profitable line, I understand that, under the rules announced in the autumn statement, he will be allowed to do so.
Another announcement made in the autumn statement was that the Government would actively encourage joint ventures with the private sector. Indeed, much of the Bill is in essence a joint venture between the public and the private sectors to improve the railways.
The third change was that the Government would allow much greater use of leasing with only the leasing payments counting as expenditure. Naturally, that will increase the amount of private sector funding which can take place. That is especially important in the context of more investment.

Mr. Prescott: A Labour idea.

Madam Deputy Speaker: Order. There are too many sedentary interruptions from members of the Front Bench, who have already had 61 minutes.

Mrs. Chaplin: Leasing will be especially important for the development of a private market in rolling stock. Eventually, I hope that the private operators will buy direct from the manufacturers or on the second-hand market or that they will lease, but it will take time. The private sector needs to do that because in doing so it will bear the risk, seek innovation and compete. It will do all the things that we want to see introduced to improve the standard of the rolling stock.
However, there are legitimate questions to be asked not only about the long-term issues but about the transition. At the moment, British Rail has been told that it can lease rolling stock, but the lessor will clearly have much greater security when leasing to British Rail, which is backed, as it were, by the Government, than when a franchisee is running a track. I hope that the Minister can say how the risk adjustment will be dealt with during the transition. Otherwise, there will not be an agreement between the manufacturers of the rolling stock and the current British Rail, and franchisees will not as yet want to purchase rolling stock until they are sure that they have secured their franchise.
A further risk is a longer-term risk which has been dealt with to some extent in the consultation document. It is that the period of the franchise is shorter than the lifetime of the rolling stock. It has been suggested that there could be longer leases, the use of new rolling stock over two or more periods and some risk-sharing.
On the issue of private capital coming into the public sector, the Financial Secretary said that private financiers cannot expect conventional, commercial terms and gilt-edged security. Everyone accepts that anyone getting involved in franchising parts of the railway knows that he will be taking on substantial risks. It is important, however, that the risks will not be over-burdensome. I hope that the Minister will restate the fact that he will fight back if the Treasury insists too heavily on a very high degree of risk; otherwise people will not provide the rolling stock in the private sector, which is so important.
The involvement of the private sector will bring innovation, make effective use of funds and improve management. Benefits will come from the improvements which can be made to the rolling stock. Such improvements will be to the benefit of all our constituents, especially the commuters. It is important for us to examine carefully the genuine risk that is shared between the public sector and the private sector so that we encourage people to invest in a way which will improve the railways.

Mr. John Heppell: I start by examining the political consequences of the Bill. I should thank the Secretary of State because the political consequences of the Bill will mean that I am already elected at the next general election. The Bill has consequences for us all, but it will have serious consequences for the Government and their supporters.
Effectively, the Bill is destined to fail. It may not fail on Second Reading, in Committee or on Third Reading—it may pass through the House. However, its proposals will


definitely fail on implementation. I can think of 132 reasons why it will fail. The real reason why it will fail is that the Government have started by asking the wrong question. They ask: how can we privatise the railways? The Bill is the answer to that question.
The Government could have asked a number of different questions. They should have asked; how do we improve the railways? If they had asked that question, we would have had a different Bill altogether. They should have asked: how can we extend the present network? How can we get more freight on to the rail and off the road? That is the Government's policy. Time and again they have said that they want more freight on the rail rather than on the roads. The figures show that less freight is being carried by rail.
The Government should have asked: can we attract more passengers away from their cars? That would provide benefits to the environment and our health. There would be fewer accidents on the road, and we would save £15 billion in the cost of congestion on our roads. The Government should have asked those sorts of question. They should have asked: can we make the railways safer? The Prime Minister and others may not have recognised that there is a price to safety. People in the United Kingdom accept that they must pay a price for travelling on safe railways. The Government should have asked: can we increase investment? I am not bothered whether it is public or private investment.
The Government should have asked such questions because they are sensible and relevant. The question of how we privatise the railways is not relevant to the problems that the railways face.
I am a former employee of British Rail, so I know a little about the railways. I am probably a rarity in the House because I am a former blue-collar employee of British Rail. I do not claim to be a railways enthusiast. I do not suppose that I had any more enthusiasm than anyone else when I went to work. I know a little about the culture which a few hon. Members have derided today. The Government want to destroy that culture with the Bill.
Anyone who has worked for, or had any significant involvement in, the railways will know that the concept of fail safe is literally drilled into employees. Every day, fail safe is heard everywhere on the railways. Effectively, if a driver collapses on the train the "dead man" takes over and the brakes are applied automatically. If a driver goes through a red signal without stopping, the advance warning system takes over, the engine is cut and the brakes are applied automatically. If the brake device is cut, an emergency reservoir takes over and applies the brakes automatically.
It is a shame that the Secretary of State is not aware of the concept of fail safe. If he was aware of it, the brakes might have been applied to the Bill. Throughout the Bill there is nothing about fail safe. I do not mean simply the safety aspect. Everything in the Bill, including finances, the network and the timetable, is not fail safe.
Railways do not run on "if, "maybe", "possibly", or even "probably"; they run on certainties. Railways run on guarantees. Unfortunately, there is no guarantee in the Bill. The Secretary of State did not give a guarantee to the hon. Members for Tonbridge and Malling (Sir J. Stanley)

and for Christchurch (Mr. Adley) and my hon. Friend the Member for Streatham (Mr. Hill) because there are no guarantees.
I am not reassured by what were supposed to be the Secretary of State's reassuring remarks. When he was asked on the BBC programme "On the Record" whether loss-making services would continue to be subsidised, he said:
I cannot give a guarantee for all time because, obviously, if no one is actually wanting to go on a particular line, then that would be a candidate for closure.
I am even less reassured by the fact that in the same interview the Secretary of State tried to play down the fears about the fare increases by saying:
I see no reason why, as a result of our proposals, prices should rise any more than they have risen recently.
I may have been reassured if he had not made that statement in the same month, January, as the headline in the local newspaper which read "BR fare shocks: Passengers reeling". The fares on some routes in my area increased by 140 per cent., from £1 for return journeys to £2.40. In another area the fare increased from £1 to £2.20. If that is the Secretary of State's assurance on fares, I am not reassured.
During the election campaign I predicted that fares would double in the run-up to privatisation. At that time I was told that I was scaremongering. I was wrong. I predicted that the fares would double; they more than doubled.
I am not reassured by the Secretary of State's efforts to placate some Back-Bench Members with small majorities by saying that there is no problem because the Government are phasing in privatisation. I think that an hon. Member said that he likes the proposals because they are evolutionary. There is nothing evolutionary about the proposals. Evolution gives the idea that, if something is going wrong with the first seven proposals, the process can be stopped. There is no way that the process outlined in the Bill can be stopped. I do not believe it, the Secretary of State does not believe it, and no one on the railways believes it.
By the time we get to the point at which something is proved wrong, the railways will be fragmented and broken up. If one does not believe me, one should look at the experiments that have already been carried out. Have any of those failed experiments stopped the drive for privatisation? Everyone recognises that Stagecoach was a failure, but we still have the drive for privatisation.
On the freight side, Charterail was a failure. It was insolvent. It could not survive and went into liquidation. British Rail owned 22 per cent. of that company. It should have been able to negotiate a better price for the track. That is what will happen with many operators. In the end, they will not be willing to pay the money that Railtrack asks to allow them to run on the track. If one wants an example of that, one need look no further than the present problems with the Heathrow-Paddington link. We are talking about a piece of track which is 11 miles long. The whole network has a track which is 11,000 miles long.
There is a joint venture between British Rail and BAA which includes negotiations about the charge for use of the track. The project has stopped because British Rail and BAA cannot agree how much should be paid for the track. British Rail is saying £6 million and BAA is saying £2 million. The problem has not been solved locally. The chairs of both those industries have had discussions about


the matter, but could not resolve it. The matter went further than that. The Secretary of State met both chairs on two occasions recently to try to resolve the problem. No solution has been found. If a problem affecting 11 miles of track cannot be solved, how can we expect to solve problems affecting a network of 11,000 miles of track? The only way is to offer operators a cut-price track. The railway will not run any more by people like me greasing the axles; it will run—

Mr. Deputy Speaker (Mr. Michael Morris): Order. Before I call the next speaker, I remind the House that we have reached the end of the period during which the 10-minute limit applied. Nevertheless, I ask hon. Members to make short speeches, bearing in mind the fact that many right hon. and hon. Members wish to catch my eye.

8 pm

Mr. Neville Trotter: I am sorry that my hon. Friend the Member for Stockton, South (Mr. Devlin) has left the Chamber. I would have been happy to remind him that, a few years ago, I had the honour to open a new main line—the east coast bypass at Selby. I still have the spanner with which I tightened the last bolt.
I am one of those who have a very high regard for British Rail. Things inevitably go wrong at times, but I am aware of the enthusiasm that many members of the management feel and I think that they have succeeded in improving the motivation of their work force. Can the railways be improved? Yes, they can, and the aim of the Bill is definitely a good one. There is room for a better service.
It seems to me, however, that opportunities for competition on individual passenger routes are limited. The main competition will come from roads. I warmly welcome the fact that, in his opening remarks, my right hon. Friend the Secretary of State was able to announce the new freight grant. Vast quantities of freight have recently moved away from the railways on to over-crowded roads, and that must be wrong. It is certainly in the public interest to prevent that from happening in the future. I am sure that the Bill will seek to ensure that that happens.
Much could be done to improve the freight side of British Rail. The board member responsible for finance was recently reported as saying at a conference that Trainload Freight ran 500 trains a day with 13,000 staff. He was apparently stunned when a member of the audience pointed out that that meant that there were 24 people to run every train. There is certainly room for improvement there.
At the same conference, the managing director of Felixstowe port described the rail freight business as lacking any imagination and any understanding of how to create a market. That, too, justifies the suggestion that much could be done to improve the way in which freight is carried on the rail system. This afternoon, I had a meeting with the chairman of British Coal, who, I believe, was not aware that this debate was taking place and who volunteered information about the problems that British Coal suffers because of the very high costs that it now has to pay to carry coal a few miles from the pit to the pier on the Tyne from which it goes south.
My right hon. Friend the Secretary of State has reassured us on a number of the most important worries in people's minds. First, he gave an assurance that socially

necessary services would continue and that there will be no wholesale closures. I believed that that would be the case, but I welcome the fact that it is now on record. Many passengers on regional railways do not fully appreciate the way in which the services that they use are financed. If the fare for a journey on Regional Railways is £2.20, the cost of providing that journey is on average £10—the remaining £7.80 comes in one form or another from the taxpayer. I believe that it is essential that we should retain a regional network, and I welcome my right hon. Friend's assurance that we shall. I also welcome my right hon. Friend's assurances that the benefits of networking will continue because I am sure that that is an essential feature of our railway system, as will be self-evident to those operating the rail system in future.
The Government have sensibly accepted all the proposals of the Health and Safety Commission with regard to the future safe operating of the railway. I should like to raise one issue, which I regard as related to safety—the role of the British Transport police, a force with which I am happy and proud to be connected. The police are responsible for security on the railway and for enforcing law and order throughout the network. They have a well-deserved reputation for dedicated efficiency. At a time of organised terrorist threats, constant security scares and an explosion of vandalism, it is most important that the British Transport police should remain a unified national force specialising in the problems of policing people in the operating environment of a railway. My hon. Friend the Minister has already assured us that the force will continue to play that role in the policing of the rail network.
The detailed parts of the Bill relating to the British Transport police can perhaps best be dealt with at a meeting with my hon. Friend, and I am sure that, with his customary courtesy and in his customary spirit of co-operation, he will agree to such a meeting. For the time being, however, I seek two specific assurances: first, that franchise operators will not be able to opt out of using the British Transport police, and, secondly, that the future funding of the force will be assured and the costs of the force recovered by one means or another—I suggest through the track authority. I hope that my hon. Friend can give me those assurances.

Mr. Freeman: I can give my hon. Friend those assurances. I should be happy to meet representatives of the British Transport police with my hon. Friend, as I have done on a number of occasions. In the consultation document, we made it clear that we envisaged a national, independent British Transport police force, and that means funding—one of the options is through Railtrack—which will automatically cover the contributions of all operators, both franchised and open access. I hope that, given the tone of that document, my hon. Friend will feel reassured.

Mr. Trotter: I am grateful to my hon. Friend for that assurance.
A great deal of thought has been given to the Bill. It is a very complicated exercise and it is most important that we should get it right. In the years ahead, this bold move will be judged according to whether or not it achieves its aims of improving the service and of attracting more customers—both passenger and freight—on to the railways. I believe that, freed of the traditional monolithic


structure of a nationalised industry, and making the maximum advantage of the skills and expertise of their staff, the railways can and must achieve that aim, and that they will remain an essential part of our society.

Mr. Hugh Bayley: Let me say at the outset that I am sponsored by the rail union, the National Union of Rail, Maritime and Transport Workers, but I speak in the interests of my constituents in York. A number of towns around the country are great rail centres but few, if any, are as vulnerable to the proposals in the Bill as my constituency: 5,000 of the 50,000 people in the local economy work for the railways. That represents one in 10 of the work force—and, on the whole, they are more highly skilled, higher-paid professional workers. If they lose their jobs in York, not only will they and their families suffer, but the city will suffer a hammer blow which will intensify the problems that the recession is causing. It is all very well for the Minister of State to say that there will be plenty of new jobs in the private sector, but they will not be in York. Some of the individuals may go to work for firms of consulting engineers in Croydon, Bournemouth or elsewhere, but they will not be contributing to the economy of the city that I represent.
The manifesto on the basis of which the Government were elected less than a year ago contained the following promise:
Our plans for the railways are designed to bring better services for all passengers as rapidly as possible.
I do not agree with much in the manifesto, but that is an aim to which I would subscribe. That pledge should be the test of the proposals in the Bill. Will the privatisation proposals mean lower fares for passengers, more frequent and convenient services, greater comfort and reliability? Will they improve safety on the railways? Will they mean better terms and conditions of employment for railway staff? Those are the tests on which the Bill should be judged.
On 30 Novemberr, I presented a petition to the House urging the Government to introduce legislation to safeguard railcards for pensioners, young people, families and disabled people. This afternoon, the Secretary of State stated that there would be a guarantee to retain the disabled person's railcard. But if we are to have a better service to the public, will the Minister extend that guarantee to the other groups who have benefited from railcards? Why is it wrong to stand up and ask for guarantees that the interests of passengers will be protected? Or have the Government just ripped up the passengers charter and put a privatisers charter in its place?
What about convenience? At present, 26 trains per day run from London to York on the east coast main line—one of the services that the Government are keenest to franchise off to the private sector—and 27 trains per day run from York to London. Will the service frequency increase or decrease as a result of privatisation? What guarantee can the Minister give me that the people who get private franchises to run from Edinburgh to London will stop their trains in York? Will York end up with a better service or a worse service? We rely on the railway for business and commerce, for social life and for tourism. It is a vital link to our city—more important than the roads.
As many hon. Members have said, comfort and reliability depend ultimately on the level of investment in trains, signals and track. Yet, as the Railway Industry Association tells us, railway investment is collapsing, blighted by the uncertainty of the privatisation proposals. The Independent of 20 January carried a report from my constituency by Christian Wolmar. It said:
In May 1994, the last Network 465 train for Network SouthEast's Kent line will roll off the production line at ABB's modern York works. Barring some unexpected development little short of divine intervention, the plant will then close. And this after a £50 million modernisation was completed last month.
That modernisation was completed in the expectation of further orders for badly needed trains for London's commuters on Network SouthEast.
The White Paper refers to a market for second-hand trains. It is not second-hand trains, but new trains, that London commuters need. People from Essex tell us repeatedly that the London-Tilbury line, the Southend line, needs new trains. Why are they not being provided? The report on the Cannon Street crash blamed the level of casualties on the fact that 30 year-old, clapped-out, rotten. "Annie and Clarabel" carriages were being used, and said that they must be replaced. The replacement would be the class 465 carriages, which are currently being built at York. Fulfilling the recommendations of the report on the Cannon Street crash will require 100 of those. When will that order be placed? The Minister has promised two of his hon. Friends that he will visit their constituencies to speak to important local railway interests. Will he come to York to meet the managing director of ABB to discuss the crisis facing the carriage works there?

Mr. Freeman: The hon. Gentleman has misquoted me.
I gave an undertaking that I would meet, in my offices in London, representatives of the port of King's Lynn and of the British Transport Police Federation. Likewise, I give the hon. Gentleman an assurance that I shall meet—for the seventh time, I think—representatives of ABB. I am in frequent touch with them, but through the hon. Gentleman I extend to them an invitation to meet me yet again. We want the manufacturing industry—especially ABB—to take a very active part in the development of the leasing market.

Mr. Bayley: I thank the Minister sincerely for that undertaking. At a weekend meeting with the managing director, I was told that the problem will start not in May next year, but that he will have to start laying people off in six months' time. If the orders do not come through now, it will be too late to keep the factory going and the work force together to build the trains that are needed. And if they are not built in York, they will be built abroad. Perhaps ABB, which is a multinational company with German and Swedish manufacturing bases, will shift abroad as much of the £50 million worth of equipment as can be moved. Buying from abroad would add to our balance of payments problems. Prices would go up, as the labour component of the cost of building trains in Germany is twice as high as it is in Britain, which itself says a great deal about wage rates in manufacturing industry in this country. We need jobs, and our transport system needs the trains. Again, I thank the Minister for his undertaking.
The Government say that they have approved leasing as a lifeline to the rail manufacturing industry, but British Rail cannot place orders; the banks will not lend it money,


because no one knows whether it will be running trains in the future. I hope that the Minister, in his winding-up speech, will tell us that the £150 million for leasing that was announced in the autumn statement will be committed to rolling stock. The Minister nods—I thank him for the undertaking that that seems to imply. But we need a further undertaking.
If the leasing goes ahead, and British Rail subsequently loses the franchise for the services on which the rolling stock is to be used, will the Government either undertake to underwrite the leasing costs until such time as the carriages can be sold on the second-hand market—that is what the Minister believes will be created as a result of this Bill—or make it a condition of tenders from people bidding for the franchise that they must take over the rolling stock and the leasing costs? If that does not happen, the promise that leasing finance will be allowed will turn out to be a will-ó-the wisp, and the benefits that the Government expect will not come through.
During the rail debate in January on an Opposition motion, I referred to the United States Hours of Service Act, which stipulates maximum working hours for every grade of railway staff. I am told by senior managers and directors of Amtrack that, in a regime with a mix of public sector and private sector railroads, the statutory regulation of working hours is a vital safety requirement. In the case of a single provider which does not face competition, such as British Rail, it is fine, without statutory backing, to expect the railway management to impose safety limitations of this type. The report on the Clapham crash called for the abolition of excessive overtime, and British Rail has responded. But when British Rail is competing against others, however, will it be able to respond in this way? Will its competitors respond without legislation? The American experience suggests that they will not. I am not thinking just of drivers' hours. The Health and Safety Executive says that the Government will consult about a statutory limit in the case of drivers' hours, but it was the excessive overtime of an electrician which caused the fatal mistake at Clapham.
Rail privatisation will trigger a haemorrhage of jobs from railway towns like York, Crewe, Swindon, Manchester and Birmingham to private sector firms. It would devastate these towns. I hope that this Bill will not be given a Second Reading, but if it is, it will create a number of quangos, such as the track authority, the franchising authority and the regulator. London is already awash with quangos. Will the Government give a commitment that these new bodies will be based in established railway towns outside London? If they do not have faith in the transport system that the railways will provide, if they do not have faith that an office in Swindon or York or Crewe would be accessible to the centre, they do not have faith in these railway proposals.

Mr. John Whittingdale: I have listened carefully to everything that has been said in this debate so far. So that my hon. Friend the Member for Christchurch (Mr. Adley), who is no longer in his place, will not be disappointed, I should say that, as a new Member, I am a strong supporter of this Bill, for whose proposals the Secretary of State has made a powerful and persuasive case.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) and the other Opposition Members who have criticised the Government's proposals give the impression that British Rail is the jewel in the public sector crown, flawed only as a result of insufficient public money handed over by a willing taxpayer. Such a description bears no relation to the facts. As several of my hon. Friends have said, far from being starved of money in recent years, British Rail has seen record levels of investment. This year, the expenditure is some £1.4 billion—a figure that has not been reached since 1960, when we had a far more extensive network. In recent years, the service provided by British Rail has undoubtedly improved, but in many areas it is still extremely poor, with frequent and unpredictable cancellations, scruffy trains, poor service, persistent lateness and lack of recognition of, let alone responsiveness to, the needs of the consumer.
Those failings are the inevitable result of public sector ownership. They were mirrored in all the nationalised industries that the Conservatives inherited before those industries were banished as the result of privatisation. British Rail suffers from all the classic problems of monopoly public sector industry. Until recently, it has had too little investment, as it has lost out to other public sector demands in the annual spending round. Year after year, it has lost money, making little attempt to reduce those losses and relying on the taxpayer to bail it out. It has shown too little interest in improving its service to the customer, as it knows that the customer has nowhere else to go.
The passengers charter has been a valiant attempt to address those failings, and has led to some improvements. But it is the infusion not just of private sector capital but of the private sector ethos which is the remedy to those problems. In all, 46 businesses have been privatised in the last 14 years. Instead of costing the taxpayer £50 million a week, they are now profitable and contribute about £2 billion a year in tax.
More important, they are profitable because they are now giving their customers the service they require. They have an incentive to increase efficiency, to stay competitive and to improve the service they offer. That is the discipline which business men in the private sector take for granted but which has been sadly lacking in British Rail.
Every privatisation is different. British Rail is not a profitable enterprise which can simply be transferred as a whole from the public to the private sector. Some parts will never be profitable and will always require subsidy. On that I disagree with my hon. Friend the Member for Christchurch, for it does not mean they cannot be made attractive to the private sector. It just means that the Government will have to continue to provide a grant to the operator in recognition of the social need for such a service.
For some groups, there will be immediate interest and a number of bidders for the franchise. For others, there may be no interest initially, and we shall have to see how the first private sector pioneers get on. I welcome my right hon. Friend's announcement of the routes which he sees as the first that are likely to be franchised. I am disappointed that the great eastern division, which serves my constituency and his, is not among them. In recent years, the service in that division has improved, but there is still a long way to go.
The recent reduction in the number of trains stopping at Colchester is an example of British Rail failing to listen


to what its customers want, while at the other end of my constituency the line to Burnham and Southminster seems always to be the first from which services are withdrawn, so that British Rail frequently appears to be running a bus rather than a train service. I hope that my right hon. Friend will consider inviting bids for that franchise soon, as I am sure that it would be of great interest to the private sector.
My right hon. Friend has in general rightly resisted those calling for track and infrastructure on those routes to be franchised also and be transferred to the franchisee. While I understand why bidders might want it, to do so would make it more difficult to have fair competition on those routes, if the possibility should arise. Initially at least, it is essential that there should be a neutral umpire overseeing the signalling and prioritising of all trains on the network. I was therefore pleased to hear his announcement this afternoon that Railtrack will be an independent operator from the residual rump of British Rail.
I hope that my right hon. Friend will continue to consider ways by which the private sector culture which he described can also be introduced into Railtrack. Most of the problems that have occurred in the great eastern division, to which I referred—I suspect that they occur elsewhere throughout the network—have resulted from points failures, signalling problems, overhead power lines down and the ubiquitous leaves on the line. I assume that those will still be the responsibility of Railtrack, and I am sure that that body could benefit enormously from the disciplines of the private sector.
A number of expressions of interest have already come from potential private sector franchisees, not least from within British Rail. That is an encouraging sign, and I hope that every assistance will be given to management teams from within BR who wish to come together to bid for a franchise. I also hope that private sector operators will eventually be attracted not just to bid for existing services but to introduce new ones.
I spoke of the great eastern lines which serve Colchester in the north and Burnham in the south of my constituency. In the days before Dr. Beeching, my constituents in Maldon also had the benefit of a rail line. That line was scrapped and despite the rapid growth in population in recent years, many of whom commute, the chairman of British Rail has told me that there are no plans to reintroduce a rail link and that the financial parameters within which BR is obliged to operate mean that the investment finance that would be involved is not available. That is a pity, as I believe that there would be demand for such a service, and I look forward to the day when a private sector operator may make it available.
There are many details of the Bill still to be worked out. For example, there will need to be complex agreements between the franchisees to allow ticketing, discount schemes and railcards. There may need to be some sort of clearing house operation, as operated by the clearing banks. There will need to be regulations governing the payment of compensation by one company to another in the event of breakdowns or delays to the train of one operator causing a failure and further delay to that of another.
All those matters will be difficult to resolve. This privatisation will not be straightforward, simple or quick. In many ways, it will once again be breaking new ground. But I am convinced that it is the right way forward and that the overwhelming view of my hon. Friends is that it is the way we should be going. I give it my wholehearted support.

Mrs. Gwyneth Dunwoody: The House will be relieved to hear that I have no intention of reading a central office policy studies pamphlet.
As we debate the Bill, we should make it clear at the outset that it is sadly lacking in any sense of where the transport policy of Britain should be going in the coming decade. Indeed, it is not clear from the measure where the policy is going in the next 10 months. That is a highly dangerous aspect of today's debate, not least because the Minister produced a large and complex Bill and proceeded to say that one of its basic tenets, the concept of Railtrack, could if necessary be overturned during the passage of the measure and supplemented by a totally different system.
Much has been said about the customers. Let us be clear that they care about the quality of service that they are given. I am proud to represent a railway constituency, and even prouder to be a member of a rail union. The Government constantly boast about the large sums of money that they are investing in the rail system. If we remove from that calculation the amount of money that is going into the channel tunnel, it becomes clear that British Rail is being squeezed tighter every year.
Hon. Members who have taken part in the proceedings of the Select Committee on Transport have witnessed that deteriorating position over the years. It was obvious when we discussed the line of the channel tunnel route, the need for electrification and the desperate need for new rolling stock. It was clear from the evidence of witnesses whom we have examined in relation to privatisation.
Our interim report was a classic example of the best of a Select Committee inquiry. Despite the efforts of some Conservative Members, it did not seek to give a biased view. It took evidence from a wide section of people interested in privatising BR, and we soon discovered that there were some basic problems with the Bill. People do not know what the charging regime will be and they cannot calculate to what extent, if at all, there should be interest in privatisation, because they cannot be sure what is being said. Who will buy a service if they do not know what they are going to be charged or what they in turn will have to charge someone else?
It is also clear that there has grown up in the Tory party such an obsession about what they call the culture of British Rail that they are not even capable of acknowledging the job that has been done by management whom they themselves appointed. British Rail has modernised over the past five years, has changed the way it operates, and has set up what it calls an organisation for quality. Those are precisely the problems that the Minister and his colleagues pretend that they are interested in.
That system has not even had a chance to work. It has been in place for less than 12 months and yet now, without any consultation with the people most concerned, a Bill has been introduced which will yet again throw the entire industry into chaos. The result is a loss of morale, a loss of


commitment and a very deep unease about the future of the railways in general. That does not end just with the railway system.
As soon as British Rail Engineering Ltd. was privatised, we were told that it was going to be able to provide rolling stock, to be much more efficient and was going to respond to the culture of private enterprise and bring forward much higher quality service to the customer.
What has happened is something different. The railway rolling stock industry, all privately-owned, all entrepreneurial, mostly with foreign entrepreneurial money because it was handed over not to British companies but to people from outside Britain, has given detailed evidence to this Government about its lack of orders and its lack of ability to get anyone to invest in new rolling stock or new orders beyond the end of the next year. It has done so in such detail that the Government have no conceivable excuse for ignoring the fact that, very soon, this entire industry, like the bus industry before it, will be unable to continue because it has no work on its books.
Indeed, in my constituency a major company, which is now called ABB, is tendering for many jobs overseas, and has asked the Government for support in financing a supply of rolling stock for a scheme in Chile, only to be told that, while it is in competition with the French, who are offering soft loans and long commitments, the British industry will not get any assistance.
It is told, as a civil servant said to me yesterday on the phone, that, after all, one has only to look at the size of the deficit of the public sector in France to understand why they have a different scheme from ours. Of course they have, because the French know that, without a transport system that works and carries goods and people around the country, they cannot compete in their internal market, let alone in external markets.
That is a basic economic lesson which this Government seem totally unable to understand. The reality is that this Bill should be voted down, not by Labour Members but by Conservatives. The reason is simple. Within a short time, their constituents, who do not understand about investment in new rails, but understand that all the trains are getting slower, who do not understand why there is de-staffing of stations or why there have to be fewer and fewer people to provide a service, do understand that it is a direct result of what the Government are doing.
These people will soon have to have their say, and they will make their views known very directly to all MPs in the south-east, and to MPs in the commuter belt—not just in London, but in Manchester—and even, I suspect, to those rather royal personages from elsewhere outside the great conurbations who have been honouring us today with the extent of their knowledge of British Rail.
I think that the Government will then find themselves in a very uncomfortable and difficult position, and I look forward to the day when it is the Conservative Members who firmly and definitely and with no compunction vote this Bill into the oblivion that it deserves.

Mr. Matthew Banks: It is a pleasure to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). I concur wholeheartedly with what she said about the Select Committee's interim report. There is no doubt that there was a heated discussion within that Committee, but those of us who were involved—a number

of vacancies had not been filled at that time on the Committee—in the writing of that report were happy to put their names to it.
The hon. Lady is right to say that it was in the highest traditions of the Select Committee system. That report appeared ultimately in a more constructive tone and asked a number of questions. The answers to some of the questions have already been heard. One or two questions discussed by my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) have not been discussed, and I look forward to hearing my hon. Friend the Minister for Public Transport commenting on them later.
I know that the 10-minute rule no longer applies, but I notice that a number of hon. Members wish to speak, so I shall follow your advice, Mr. Deputy Speaker, and be brief.
I welcome the variety of the franchises announced today by my right hon. Friend. They represent a cross-section of the railways in Britain at present—what my hon. Friend the Member for Norfolk, North West (Mr. Bellingham) described as InterCity routes, and also those in urban conurbations in the south-east in particular.
Now that the Bill has been published and the Government have made it clear that they intend to press ahead with these proposals to introduce new opportunities, the public are rightly asking mundane but nevertheless important questions about whether networking benefits will be continued, about whether the price of tickets will remain the same or go up or down, whether investment will continue and increase and whether the proposals will ultimately lead to a better railway.
Those are questions which the public rightly ask—and which we also ask. If the railways were working well, there would be no need to change, but unfortunately, as some of my hon. Friends have said already, they are not working as well as they might be. That is why I believe that the sensible, gradual approach by the Government, starting with this Bill, with a step-by-step introduction of new opportunities and new operators, not to mention the opportunities for rail freight, is an approach with which the Government should press ahead quickly and with vigour.
I should like to pick up two points mentioned in the debate so far. I am delighted that Railtrack will be independent. When I spoke in the supply day debate some time ago, I urged the Minister to look at this, and I know that it is something that my hon. Friend the Member for Harwich (Mr. Sproat) feels is very important. I see that he is in his place, and I join him in welcoming an independent Railtrack.
I hope that privatisation will lead to greater efficiency and to greater transparency of the cost of running the railways. Therein lies a problem, but it is one that we can overcome. I hope that the Minister will once again take the opportunity to make it clear in his reply that there will be continued and sustained investment by the Government in the infrastructure of the railways in future. That is vital if the proposals are to succeed.
I have no doubt that there will be some broad smiles in the private rail freight industries tonight. I was particularly delighted to hear my right hon. Friend the Secretary of State refer to the freight facilities grant scheme. I am particularly pleased that he has also announced that, in many instances, 100 per cent. grants will be available for freight charges, because, if we are to encourage freight off


the roads and on to the railways and to encourage the freight that is already on rail to stay there, it is vital to address these issues, and I warmly welcome what the Minister has announced in this debate.
I cannot hide my personal concern at the fact that British Rail in one case has increased by 180 per cent. the charges levied on some rail freight users. However, I balance that comment by welcoming the fact that Trainload Freight has taken on an extra 2 million tonnes of freight. That shows that, although some freight is leaving the railways, it is being replaced by new business.
The Government and the regulator must take action to promote the rights and priorities of rail operators. Private operators are very much behind the Government and want privatisation to succeed, particularly in rail freight. When the Government do set up regulatory and consultative bodies, those who are involved in running rail freight in the private sector must have the opportunity to have their views represented on those bodies.
I cannot emphasise enough the importance which I—and, I know, hon. Members on both sides of the House—attach to achieving a more competitive pricing regime with road haulage. I agree with my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell)—I know that it is something dear to his heart—that we need open competition in rail freight as soon as possible.
Mention has been made of investment. I ask my hon. Friend the Minister once again to make it clear that, in the next two or three financial years, substantial investment will be made available for the track, signalling and infrastructure schemes which are pending. My hon. Friend knows my particular concern about the west coast main line, but it is important not only to my constituents but to those of other hon. Members on both sides of the House representing constituencies on routes to the north-west, the west midlands, north Wales and, of course, Scotland.
I am concerned that there has been some distortion of the investment figures in the debtate. In the evidence that he gave to the Transport Select Committee, my right hon. Friend the Secretary of State mentioned that some £1 billion would be spent in each of the next three financial years. One or two hon. Members have sought to suggest that the investment in infrastructure—I am not talking about the other £1 billion to be spent on running the railways—is already committed.
In 1993–94, some £450 million of that £1 billion will be required for the channel tunnel; in 1994–95, some £270 million will be required and, in 1995–96, as the channel tunnel nears completion, some £80 million at 1992 prices will be required for it, including deferred interest and payments in advance. While I accept that, in 1995–96, we may have constraints on public sector spending equally as difficult as those we have now—no doubt it will be the same in years to come—I look to my hon. Friend the Minister to make it quite clear that, when we take away the amount required for the channel tunnel, which will decrease over the next three years, some of the investment that my right hon. Friend described to the Transport Select Committee will be spent on the schemes for improving the track and infrastructure of Britain's railways, and particularly the west coast line.
I believe that the answer will be affirmative, but I hope that my hon. Friend will make it quite clear that, although

he intends to press ahead with these proposals for new opportunities, he will always recognise the requirement for important Government investment in the infrastructure of our railways.
My hon. Friend knows that I wholeheartedly support the Government's proposals for bringing in new pilot shadow franchises, and I am pleased that they have announced extra money for British Rail to ensure that they run smoothly. It is vital that we press ahead as soon as possible and do not allow the grass to grow under our feet.
With one or two honourable exceptions, there is widespread support for the Bill among Conservative Members. No matter what the difficulties—there are always difficulties involved in privatisation—they will be overcome. It is a gradual, step-by-step approach, and I urge my hon. Friend to see the proposals through for the benefit of the consumer, and to do so quickly and with the utmost vigour.

Mr. Ieuan Wyn Jones: I am pleased to have the opportunity to participate in the debate. As with so many other hon. Members, there is a great rail interest in my constituency, particularly in Holyhead, which has a great tradition on the Irish traffic route and an historical involvement with the Irish mail.
I should like to make two points about the Secretary of State's speech. It would have been useful if hon. Members could have had copies of the plans for the proposed franchises. It was difficult for many of us to understand what he was saying, and I have never before heard policy made on points of order.
Perhaps, in his reply to the debate, the Minister could clarify the exact position regarding the proposed franchise for Scotland. Will it go to Inverness? Will it be an InterCity service? Where will the service go in south Wales? Will it stop at Cardiff, or will it go through to Fishguard? We have a right to know whether those services will be InterCity services and whether the franchisees will have an obligation to offer those services.

Mr. Freeman: The House will wish to know that, in the Vote Office, there are maps which clearly show the precise geographical limitations of the first franchises. The answer is that it will go to Inverness and that it will go to Fishguard as an InterCity service.

Mr. Jones: I am obliged to the Minister for clarifying that.
I am sure that he will also have heard the representations made by the right hon. Member for Strangford (Mr. Taylor) about the European fast train network. I am sure that it will come as no surprise to the Minister that I disagree with those representations, because I agree with the first draft prepared by the European Commission, stating that the proper route for Irish traffic is along the central corridor between Holyhead and Dublin bay.
I urge the Minister to support the European Commission in that view. We have many advantages, particularly in terms of geography, as 50 per cent. of all freight in the Irish Republic comes within a 50-mile radius of Dublin. Therefore, it is clearly more convenient and practical for the freight to go along the central corridor.
We will be waiting to hear from the Minister about the improvements to be made to the north Wales coast main line as a result of that European network.
In the Europe of the 21st century, if the single market is to mean anything and if we are to give the business community and the leisure traveller more travel opportunities, people must be able to travel quickly, efficiently and easily. In the 21st century, we are also forced to consider the environmental impact of greater travelling opportunities. It is little wonder that, in the Netherlands, Germany, France and other European countries, investment in railways is seen as a way of transferring traffic from road to rail for environmental and social reasons.
In the Netherlands, there is a clear policy to reverse the spending balance, which is currently in favour of road building, to rail. As a result, rail travel in the Netherlands has increased by 25 per cent., and the equivalent of £1.5 billion in strategic mainline spending is under way. That would be equivalent to investing about £300 million in Wales.
We know about the considerable investment that the French are making in their rail services. In no European country with which we trade is there any talk of privatisation or fragmentation of railway services. Indeed, it is the opposite. All our major competitors think that it is vital to have a coherent transport policy and that rail services should be properly planned and resourced. In the drive to ensure a properly integrated European high-speed train network, pan-European planning and co-ordination is essential. Failure to take part in that exercise will have disastrous consequences for our economy.
A strategic European railway network must be based on through ticketing and integrated services. The present plans for services from the United Kingdom to European destinations have required detailed linking of train operations in Britain, France, Germany, Belgium and the Netherlands on a through-service or direct-connection basis. Any attempt to operate international services on any other basis is fundamentally flawed.
The high-speed rail link on mainland Europe will transform the economies of the European core area, and those of us on the periphery will effectively be cut off from participating in that transformation. That means that countries such as Wales, which is already fragmented within British Rail's operational structure and outside most of its current core service areas, will be at a double disadvantage.
The high-speed rail network proposed by the Commission, which includes services to north and south Wales, will be jeopardised by the Bill. In the European context, the philosophy behind it shows that the Government are tackling yesterday's agenda and jettisoning today's requirements. The policy agenda of privatisation is misplaced, misconceived and will harm our long-term economic interests.
Within British Rail's current operational structure, Wales suffers from fragmentation and the lack of a coherent framework. Under the profit centre approach to franchise allocations, Wales—a small country of 3 million people—will have five operators. The section from Paddington to Cardiff on the Great Western line is regarded as a core service, while all destinations west of Cardiff are regarded as peripheral.
On the west coast main line, all services west of Crewe are regarded as peripheral. In terms of Regional Railways,

services west of Cardiff, Wolverhampton and Chester are regarded as peripheral. It is little wonder that we feel under threat as a result of the policies.
We are told that Railtrack is expected to act in a commercial manner and that it will not be subsidised. It must make an adequate return on assets, but will it be able to secure adequate funding for long-term investment—for example, in the upgrading and electrification of the west coast main line and the Great Western?
I understand that the Minister has been speaking to local authorities in north Wales and the north-east about the possibility of electrification. I wonder whether he can tell the House the latest state of play on that application.
Will Railtrack be able to secure adequate funding for long-term investment? Will it be expected to produce a reasonable return on investment? Because Railtrack will have to operate on commercial lines, there will have to be subsidies for the franchisees and other operators. We must be told to what extent and for how long those subsidies will operate.
Apart from the franchise that the Secretary of State announced, what interest has there been in securing franchise services for the routes in Wales? Will there be any attempt to secure a coherent strategy for the development of the rail network in Wales, or will we for ever remain on the periphery of the United Kingdom rail network, which in turn will be on the periphery of a high speed network on mainland Europe?
The Government's obsession with privatisation, which is mirrored in the Bill, will have a catastrophic effect on rail services. It will produce fragmentation when what we need is coherence. I fear that, in many parts of the United Kingdom, it will lead to reduced investment when more is urgently needed. It will drive us into a European backwater, while our major competitors are forging ahead with a modern European transport system. For those and many other reasons, I and my colleagues will be in the No Lobby tonight.

Mr. Raymond S. Robertson: I intend to take a few minutes of the House's time to put the record straight on how rail privatisation will affect Aberdeen. I make no apologies for being so parochial. Given Aberdeen's geographical position, I am sure that the House will realise how vital our communications network is.
On the last occasion that the House debated this subject, on 12 January, the hon. Member for Cunninghame, North (Mr. Wilson) showed his usual dislike of the truth and displayed his uncanny knack of ignoring the facts if they do not quite fit his argument. He said:
the expectation and reality must be the substantial closure of railway lines throughout the country and in particular rural lines which exist for a social as well as a communications purpose.
Nobody need be in any doubt about this … One has only to read about what Grampian Transport wants to do. It wants to concrete over the rails and create busways."—[Official Report, 12 January 1993; Vol. 216, c. 853.]
I shall focus on the last part of that quote. If, as the hon. Gentleman said, Grampian Transport is interested in rail privatisation because it wants to concrete over the rails, that would be serious and would cast doubts over public transport in Aberdeen. However, it is simply untrue. It


does not. Its interest is legitimate and genuine. Unlike Opposition Members, its interest in rail privatisation is quite visionary.
Grampian Transport is a private bus company which has taken advantage of the Government's earlier privatisation policy, and it is a success story. It has a legitimate interest in rail privatisation in two key areas. First, the company wants to involve Aberdeen city to create a partnership between bus and rail services. The hon. Member for Cunninghame, North seems to be blind to the fact that the two are not mutually exclusive, but can be complementary with foresight and planning. The company has already commissioned a feasibility study into providing a rail system from one of Aberdeen's growing suburbs in Dyce—a growth area—to get commuters into the city centre speedily. ScotRail refused to do such a study.

Mr. Wilson: The hon. Gentleman has been reasonably offensive, but I shall not reciprocate. Is he telling me that Grampian Transport has not proposed to convert existing rail lines into dedicated busways? If he is not telling me that, I think that he should withdraw his opening remarks.

Mr. Robertson: If the hon. Gentleman listens to me, he will understand exactly what Grampian Transport is trying to do.
In addition to that feasibility study, it commissioned another study, to use the Oban guided bus system between Aberdeen airport and the city centre. That combines the flexibility of the bus system with rails to produce the maximum utility of the track.
Those two projects have an exciting potential and are long overdue. They could soon be a reality. By getting the private sector involved, Aberdeen—Europe's oil capital—could get a genuinely first-class commuter service. Those of us who are campaigning to get the Petroleum Engineering Directorate relocated in Aberdeen will welcome the fact that we will be able to tell the seemingly reluctant civil service that people will be able to get from the airport to their offices in the centre of Aberdeen very quickly if the scheme goes ahead.
Why does the hon. Member for Cunninghame, North seek to prevent that? Why does the hon. Gentleman seek to deny the people of Aberdeen an integrated public transport system which could be the envy of Europe? I will gladly give way to him if he will tell me.

Mr. Wilson: I do not want to take up the time of hon. Members on either side of the House—I have the opportunity to make a speech—but I will gladly debate with the hon. Member for Aberdeen, South (Mr. Robertson) the public transport needs of Aberdeen, and I will also explain to him how the transport policies of the Government that he so ardently supports have failed them for many years. However, on this specific matter, he seems to reinforce my point rather than contradict it. He might have investigated the brief before he read it.

Mr. Robertson: So the hon. Gentleman is not willing to explain to the people of Aberdeen why he will deny them this.
It is not just in Aberdeen that Grampian Transport has an interest. It is now preparing plans for Aberdeen's links with Elgin and with Inverness, with combined rail and bus

services, through ticketing arrangements and one timetable. Passengers will be able to go from city centre to town centre with one ticket, on one timetable—bus, train, then bus again. If that is a success, the company is interested in extending the service from the centre of Aberdeen to the centre of Glasgow, to the centre of Edinburgh and even to other areas in the central belt.
I will end by quoting Moir Lockhead, chairman and managing director of the company:
Lines which in the 1960s were unviable economically may have become potentially attractive to the private sector, due to the increase in congestion on the roads, pedestrianisation schemes and parking difficulties and a growing awareness of environmental issues as well as the reduction in costs from advanced technology and greater efficiency. Our approach will underpin the rail system, not undermine it.
That does not sound to me like a man who wants to concrete over the rails and pull up the tracks.
In Aberdeen, the private sector is up and ready to go. It wants the green light from this House. What has happened in Aberdeen can happen elsewhere. Tonight, the House must defeat the Luddite tendency of the Labour party.

Mr. John Gunnell: In 1981–86, as leader of West Yorkshire county council, I had some political responsibility for the development of a local rail network. During that period, we were responsible for the start of the turning round of the rail network in the area, so we have something to tell the House—a story of success on the railways, something that needs to be taken into account when one is looking at the present proposals. I would judge that success by two factors. The policies that we followed and developed have been practised since, and are still in operation in West Yorkshire. In the 10 years from 1981–82 to 1991–92, we increased the passenger numbers from 6.6 million to 15.3 million—an increase of 130 per cent. At the same time, and as a result of the increase in passengers, there has been an increase in the recovery ratio—that is to say, less subsidy is now required per passenger.
At the time that I became leader of the county council, many lines produced less than 20 per cent. of their income through fares, with an average in the mid-20s. Now the average is 38 per cent., and that is a reduction from figures in the low 40s before the recession hit our area. But we have no individual line which is less than 30 per cent., and although the actual cash level of subsidy is only a little reduced, it is supporting a far larger rail network and more than twice the number of passengers. It is therefore important to ask what factors have led to those changes, because they are factors which can lead to success in the rail network.
I can list four: timetabling, pricing, marketing and investment. We have timetables which are designed to suit public use and not simply the convenience of rail operators. We introduced in 1981 a freeze on fares, and that freeze lasted until 1986. Since then, the increases have been modest. The freeze on fares was accompanied by ticketing of an imaginative kind, designed to attract more passengers to the network. The ticketing systems were accompanied by aggressive marketing, using television and posters.
But as well as that, there was investment in rail. We have invested over the years in new stations. Eighteen new stations have been opened, increasing the number from 47


to 65, a rise of 38 per cent. New rolling stock has been purchased, and more new rolling stock would be under way at the moment if the money were released for it. Instead, in the present uncertain climate, as I mentioned to the Minister in earlier debates, those orders are held up and the company in Hunslet in my constituency is unable to proceed with their manufacture. The Minister said that he would meet the chairman of the passenger transport authority to discuss the subject. I know that he has met the chairman, but I do not think that he has yet given him or the company involved a guarantee that part of that £150 million will be used on those trains that are currently held up in west Yorkshire.
Those mechanisms, which have been used elsewhere, have been successfully used to turn around a rail network. I think that the Settle-Carlisle line is an example of a line that the former Minister of State for Transport reprieved after joint action by local authorities and British Rail. Positive marketing of that line significantly increased the number of passengers on it.
Changes can be made that will improve the rail network. We have all agreed today that we want the rail network in this country to develop, but the proposals in the Bill are the politics of the asylum. If we are to have a successful privatisation, it must be based on potential profit.
When the Government have been privatising, they have generally taken industries that have clearly been capable of delivering a profit—often monopoly industries, which have been certain to deliver a profit. However, the rail network makes little, practically no, profit on most lines. It is significant that, in order to start work on the system, the Government are having to take selected lines and pull them out of the network to create an artificial profit.
Through the lines selected and a grant system, the market is being rigged to generate profit. I am not opposed to the grant system as such, but under the system, profit is falsely generated. The rail network is a public sevice and should remain so. The changes will not work unless that remains the case.

Mr. Keith Mans: I am grateful to be allowed to make a short speech before the wind-up speeches.
My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) made an eloquent speech, but it contained an error. He suggested that the Government and the Conservative party had been considering rail privatisation only for the past two and half years. It has been a subject of much debate for much longer than that.
Some four and a half years ago in the Chamber, we had a debate on rail privatisation under the Consolidated Fund. In that debate, a number of my hon. Friends and I advocated a track authority, a franchising operation, the splitting up of tracks and trains, and privatisation generally. Since then, the debate has virtually completed a circle. We have considered regional monopolies and various other ways of achieving the movement of British Rail into the private sector.
Therefore, I am delighted to welcome the Bill whole-heartedly, as it follows on so closely from that debate of four and a half years ago. During that debate, I drew an analogy between what I considered to be the success story of the airways among the airlines and what

was proposed for British Rail. At that time, the recently privatised British Airways was going from strength to strength.
It is worth acknowledging the position in Europe, whereby virtually all the railways are in the public sector and are making a loss, and the vast majority of larger airlines in Europe are still in the public sector and are making a loss. However, British Airways, in the private sector, is making a profit, even during the recession, when virtually every other transport company—in both the public and private sectors—is making a loss.
If it shows nothing else, that illustration shows that, if one gets it right and produces an organisation that is customer not producer-orientated, one can attract passengers and freight, and make a success of encouraging further investment. That is a shining example of what can be done with British Rail when it moves into the private sector.
Some may consider that certain routes are cherry picked, but we can improve upon even British Rail's good routes, ensuring that they give an even better service to the public, attracting passengers away from other forms of transport and back to the rail network. Therefore, there is nothing wrong with the idea of moving even the profitable routes in the public sector into the private sector.
The Opposition are always of the view that, for a service to be improved, it must have more money poured into it. It is important to measure not the inputs, but the outputs. The success of this legislation will be judged not by the doom-laden prophets of the Opposition but by the British public, in the choice that we shall give them and in the improved rail service that they will get. I am convinced that they will choose by travelling on British Rail, by allowing more investment and by allowing the service to expand during the years ahead in the private sector.

Mr. Brian Wilson: We have had a good, if fairly predictable, debate for the most part. I was interested to note that paragraph 1 of the Conservative central office brief advised Conservative Members to emphasise that British Rail is not working well, and all the little parrots lined up to oblige on that score.
It strikes me as cheap and pretty miserable that people who have been in Government for 13 or 14 years—one Conservative Member who spoke held a central position advising Ministers on the policies to be pursued—take no responsibility for the consequences of their actions. Instead, as a political device, all they can do is denigrate the efforts of the people who have worked valiantly over the years to keep the railways going and to create what in many areas of Britain is still an excellent and socially responsible railway system.
Out of the clutch of press releases today—the Secretary of State managed six—perhaps the jewel in the crown is the one headed
First lines to be prepared for franchising".
We even have a helpful map to illustrate the final selection. That map will be of great interest around the country. It will not be of all that much interest in areas whose lines have been selected, where apprehension might be a better word, but people throughout Britain will notice that their lines are not on the map and it is they who will be asking questions.
Those lines and sectors that have been selected by the Government as the first to prepare for franchising will,


during the next year, receive the kind of attention that will presumably make them fit for Mr. Branson, or whoever, to inherit. But people served by the rest of the network will wonder what will happen to their lines. I shall be pleased to give an answer to that tonight.
If money is to be poured into the Tilbury-Southend line in order to bring it up to the standard to enable it to be sold off, will that come from within Network SouthEast or British Rail's existing capital allowances? If so, will that not inevitably be at the expense of the rest of the network?
Take note, the lines on the map are the ones that have been selected and in which the Government have a vested interest in promoting as potential franchises. But that can only mean that the fragmentation has begun, along with the rundown of the rest of the railway.
I want to start with the question of safety, as I do at a high point in every speech that I make on this subject. Since we debated the matter a couple of weeks ago, much attention has been given to the Health and Safety Commission's report. I do not object to political point scoring, but I do object to the gloss that the Secretary of State has persistently put on the report because the subject is of such seriousness.
The Health and Safety Commission gave no clean bill of health to what is being done: let there be no misunderstanding about that. In case some Tory Members still do not understand what the Health and Safety Commission's report says, I quote it again. It says:
The consequences of failing to achieve adequate systems of control will be seen in an increased risk in the railway system and the likelihood of an increase in the numbers and possibly also the severity of accidents.
I desperately hope that will not prove true and that the number and severity of accidents does not increase. If the Bill is passed, I hope that the Health and Safety Commission's 38 proposals to ameliorate that risk will be sufficient and will be implemented.
Who in this country asked the Government to put in place a railways system that is inherently more dangerous to the extent that such safeguards must be taken? The answer is, no Member of Parliament, no one who works on the railways, and no one who travels on the railways. As the evidence given to the Select Committee proves, almost no one in the country wants the Government to do that. It is a unilateral act of irresponsibility on the Government's part to put in place a railway system that is less safe than that which exists.
We are already seeing attempts to rationalise irresponsibility. One of the alleged intellectuals of the Conservative party, the hon. Member for Havant (Mr. Willetts), produced a document that is of considerable interest to my right hon. and hon. Friends, though I suspect that there is less concern among Government Members to publicise it. Such is the way that ideas start. Soon, for reasons that we can well understand from today's debate, an explanation will have to be given as to why less money should be spent on safety, because that is the direction in which all the pressure will be applied.
The hon. Member for Havant's advocacy of rail safety deregulation confirms that the surest way to be hailed as an intellectual and thinker is to say something of such stupidity that no cautious mortal would dare to advance it. The hon. Member for Havant reached the momentous conclusion that railway safety is not cost-effective and

wants a moratorium on new safety measures. He has a point when he says that safety costs money and that that is reflected in fares. However, if the hon. Gentleman thinks that rail safety costs money and drives passengers away, what does he imagine their perception of danger would do?
The hon. Member for Havant should say what is the cost-effectiveness of a rail accident—of a Clapham disaster.

Mr. Alan Duncan: In the absence of my hon. Friend the Member for Havant (Mr. Willetts), will not the hon. Gentleman admit that my hon. Friend was simply pointing out that there is a statistical quirk in published safety figures—that when fewer people travel on the railways, the per capita safety record worsens, even though more money might have been spent on safety? My hon. Friend was merely making a statistical point. If the hon. Member for Cunninghame, North (Mr. Wilson) cannot understand that point, that reflects on him and not on my hon. Friend.

Mr. Wilson: It is not a statistical quirk but statistical drivel. I would have told the hon. Member for Havant that I intended to refer to his article, but I knew that he was around earlier and was capable of being present.
The hon. Member for Havant should not only come to the House and try to justify a moratorium on safety expenditure; he should stand outside any commuter railway station on Network SouthEast and tell passengers that Tory thinking is that too much money has been spent on saving lives on the railways, and that by some demented ideological device less money should be spent for that purpose.

Mr. Duncan: The hon. Gentleman misrepresents my hon. Friend's argument.

Mr. Wilson: I am not misrepresenting it but representing it very well. That argument is there in black and white and represents a train of thought in the Conservative party that will be brought into play more forcefully. [HON. MEMBERS: "Hear, hear.") I hear support for it from the Conservative ranks. That thinking will be brought more into play because of the need to force down—

Dame Elaine Kellett-Bowman: That is drivel.

Mr. Wilson: If the hon. Lady thinks that her colleague's words are drivel, she should so inform him.
We learnt today of the complete separation of Railtrack from the operators, in the form of a separate company, and of the appointment of Mr. Robert Horton to preside over it—a man too abrasive for BP but just the person to act as the interface between the track authority and rail users.
The Secretary of State said today that Railtrack should contract out services and that would be vital in keeping its prices down. Perhaps the Secretary of State will say which services he has in mind. Will they be the maintenance services performed by the people who work on the track and who undertake necessary safety work at present? If Railtrack contracts out those services, it can only lead to casualisation—to people working on the railway lines who are not used to that work. It can only lead to cheaper


labour. The Secretary of State confirmed that when he said that contracting out services will be vital in keeping prices down.
Then the Secretary of State tells us that track franchisees will pay only what they can afford in charges. What does that mean? Does it mean that a subsidy will bridge the gap between what it costs to maintain a safe railway and what the operators can afford? Does the Secretary of State guarantee that that gap will be fully bridged? The moment that he fails to do so, there will again be pressure on British Rail to keep down spending on safety: that is the inevitable logic of what he is saying.
Let me now deal with the general subject of network benefits. Last week, a document emerged from the Department of Transport. Its contents have, to a substantial extent, been confirmed by what the Secretary of State has said today. It is a very honest document, and I believe that its contents, and the statements that are emerging from it, will capture the public's interest in the weeks ahead as much as anything that has been said in the debate. The matters involved directly affect the travelling public.
Let us go through the headline conclusions of the document, as confirmed by the Secretary of State today. According to the Department, discounts and through ticketing "should not be imposed" on private operators. Train operators cannot be expected to sell tickets for services other than their own, because this
runs contrary to commercial interests".
Any scheme to replace railcards should be decided by each private operator on the basis of "their own marketing strategy", and private operators might choose to retain railcards for the disabled, but would do so
for the public relations benefit".
Those are the conclusions in the document, and the Secretary of State confirmed today that the disabled persons' railcard would be retained for public relations reasons. According to the document, only 40,000 disabled persons hold railcards. Financially it is not very significant one way or another. Many operators might consider that the public relations benefits of continuing to offer discounts to disabled people are well worth such a small cost.

Mr. Adley: Last week, some members of the Select Committee visited the networking office at Euston. We were told that if more than one operator ran trains on a piece of line, the long-hallowed advantage of being able to turn up and get on to a train would probably be lost, because everyone would have to have a piece of paper. Has the hon. Gentleman considered that, in the light of the fact that the east coast main line is to be franchised although part of it will continue to be run by Regional Railways and others?

Mr. Wilson: The hon. Gentleman is absolutely right. It is transparently obvious that there will be problems in the whole business of the inter-availability of tickets once the fragmentation of operations has begun. But let me return to the question of disabled people, which, I know, concerns the hon. Gentleman as much as it concerns Opposition Members.
Let me make it clear that Opposition Members do not see the railcard for the disabled as a public relations benefit for some cheapskate operator. The Department of Transport document make no mention of rights or of social need. Only 40,000 disabled railcard holders can be

bought off for the benefit of public relations; but the families, pensioners and young people who hold railcards are too numerous, and will therefore be dispensed with. There is no guarantee of a national rail network benefit for them.
Let me repeat the question that I asked the Secretary of State earlier: will he guarantee the continuation of national railcards for pensioners and for people of 24 and under? Will he also guarantee the continuation of the London travelcard, which at present covers travel on London Regional Transport, London Buses and British Rail, and the continuation of the family railcard? I am not the one who is waiting for an answer; 4 million people, many of them constituents of Tory Members, are waiting for that answer, which will be either a deafening silence or an eventual no.
Notwithstanding all the other provisions, the sheer vandalism of breaking up InterCity takes a bit of beating. How these ideologues despise anything in the public sector that actually works, and works well—that returns a profit, provides decent working conditions and gives people a reason to take pride in their work. They despise it, and they must destroy it: they cannot just leave it to operate more successfully. That has led to the breaking up of InterCity, and to the hiving off of profitable routes, especially the east coast route, from the rest. When one takes away what is profitable, what is left for that which is unprofitable?
Within InterCity, the east coast main line route makes a profit of about £60 million. If one adds together the three sections of InterCity which will be put into the shadow franchises, one has a profit of roughly £70 million. The overall profit of InterCity last year was, say, a couple of million pounds. It does not take a mathematician of even Conservative standards to work out that if one takes £70 million out of the equation and sets it against a £2 million overall profit, there will be a deficit of about £68 million left for the rest of InterCity.
Is the Minister saying that there is to be a subsidy on the parts of InterCity which remain with British Rail? Is a railway which is not at present subsidised going to be subsidised to allow the private sector to make a profit on what has been hived off? If there is to be no subsidy, who is to meet the cost of the deficit which already exists on those parts of InterCity which would remain within the public sector?
I want the Minister for Public Transport to clarify what is to happen to InterCity. I have already referred to the map which is headed
First lines to be prepared for franchising".
There is no word of shadow franchising or experiments and no sign that it may or may not happen.
The hon. Member for Norfolk, North-West (Mr. Bellingham) raised the issue of InterCity being retained as a single entity. The Minister told us, helpfully, that he was shortly to meet the director of InterCity about
retention and strengthening of InterCity identity.
That will be an interesting conversation. He will tell the director of InterCity that he is taking away three of his profitable routes to turn them into autonomous businesses within British Rail while, at the same time, he is talking about the retention and strengthening of InterCity identity. How are the two compatible?
To be fair to the Minister, I believe that in this instance his words reflected his own thinking and wishes. He said that the Government had taken no long-term decisions


about the future of InterCity. With the authority of the Secretary of State, the Minister must tell us whether this is true or false: are the InterCity routes designated on the map the first lines to be prepared for franchising? Is that a positive categorical statement, or have no long-term decisions been taken about the future of InterCity?
The Minister should make no mistake, because no one who lives on the sections of the InterCity routes which are not covered by the proposed franchises will be in any doubt about that. If InterCity is fragmented, many of the communities which at present benefit from InterCity services, especially direct InterCity services, will not have them in the future. That message will strike a chord with everyone who instinctively understands it to be the truth.
Of course we welcome the freight initiatives which were announced today. Of course we would, because we, and especially my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), have been arguing for them for many months. We shall make a closer inspection of the small print, but basically, if the measures are designed to get freight on to the railways and off the roads, we are behind them.
Surely the Minister can say how long we are to wait for the measures to take effect. Is it to be 18 or 8 months? Are we to stand idly by for another six months or one year watching the haemorrhaging of rail freight continue? Are we to watch the cargoes of cement, oil, bitumen and chemicals transfer on to the roads?
In referring to the central office brief, hon. Members raised the issue of charges being imposed by British Rail for its freight services. There is a problem. I deplore the increase in charges on which British Rail is insisting. There are, however, conflicting statements which the Minister can resolve now.
The Freight Transport Association and other bodies will say that when British Rail imposes large increases, the reason given is that British Rail is still required to operate according to the financial objectives set down by Cecil Parkinson in 1989. If the Government had any wish to get freight on to the railway and off the roads, instead of driving it at an alarming rate in the other direction, they would have long ago abandoned those objectives. It is no longer tolerable for the Government to tell British Rail that it must pursue those objectives and for British Rail to tell the customer that that is why it is having to impose the increased charges, while Ministers tell the House that nobody has talked about those objectives for years and that there is absolutely no requirement for British Rail to abide by them; and for Tory Members then to abuse not the Government for their objectives but British Rail for carrying them out. There is an opportunity tonight for the Minister to clarify those matters.

Ms. Hilary Armstrong: Is my hon. Friend aware that such charges have led to the proposed closure of a railway line in my constituency which is used by Blue Circle to transport cement? The proposed closure of that line from 1 April will mean that the cement is carried on a rural, narrow road. The threat to the environment and to the safety of many people in the area, which the Government have established as a tourist area, will be great.

Mr. Wilson: Let us take that as a test case. The Minister could return to his office tonight and sign a piece of paper which would put an end to that proposal here and now. It is a question of whether the Government will do that. They have stood idly by and brushed aside all such ideas. It is 18 months since the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) got a bit of cheap publicity by talking about transferring freight from road to rail. Since then, nothing has been done and freight has moved at an enormously fast rate in the other direction.
Today, the Government have tabled proposals which are unexceptional. When will they be implemented? If the Government wait much longer, many more hundreds of thousands of tonnes will be lost by British Rail and many thousands of lorry loads will be transferred to the roads. That is the reality. Let us have a declaration tonight that the proposals will take effect immediately, although belatedly. All Labour Members will then be pleased to support the Government's freight proposals.
I am interested in the idea that it is possible to subsidise freight. It is possible to accept the idea of no cost being made to the infrastructure by freight. Why was not that proposal accepted six months or a year ago? Why did not the Minister accept that proposal when we discussed it in a television studio less than three weeks ago? Everything in this game seems to have been thrown together at the last minute to put some gloss on the proposals.
We have had an interesting preliminary debate tonight and we will proceed to an interesting preliminary vote. No hon. Member in the House should believe that it is anything more than that because the real debate is in the country. Today's events have accelerated the debate. The Secretary of State is losing the debate at a rapid rate of knots, even before people really start asking questions. As I said, people will be looking at the map and seeing which services are not on it.
The west coast line has been referred to frequently tonight. Conservative Members also have an interest in that. Let us have another case study. The Minister should be able to tell us with some authority the future of investment in the west coast main line if the lines on the map are the first to be franchised, and if some gritty entrepreneur races trains up the east coast main line to take advantage of the £700 million or £800 million of public money which has been invested in it. Who will invest the money in the west coast main line?
The Government must have some idea who will give the money to Railtrack for investment in the west coast main line. If the Minister cannot answer the question, it is fatuous for Conservative Members piously to hope that there will be investment in the west coast main line. The simple answer is that there would be no major investment in the west coast main line. We all know that trains can continue from Edinburgh to Glasgow as a result of development of the east coast main line.
As a result of under-investment on the west coast main line and the increasing failure rate on that line because of the age of the infrastructure, how long will it be before Railtrack decides that the InterCity line will stop at Preston and thereafter be handed to Regional Railways? A similar pattern will be replicated all around the country. There will be Rolls-Royce lines on which a limited number of services will operate, and the rest will become feeder lines—second-rate and under-invested lines.
Throughout the months of debate on the matter, I have not heard a satisfactory explanation about where the


investment in Railtrack will come from. I know the theory of where investment will come from for train operators—entrepreneurs will appear to run trains and merchant bankers will fall over themselves to invest money for the enormous rate of return which will be offered. However, I have never yet heard anyone seriously attempt to explain where the capital for Railtrack will come from—other than from the revenue raised through the operators. The operators will not be able to pay the costs needed to maintain the infrastructure. The infrastructure will diminish and we shall have fewer lines, fewer services and fewer passengers on the railways and more traffic and freight on the roads. That is the formula on offer. There will be no railcards, no national network benefits and a huge bureaucracy—a fact that will be more clearly understood as the debate continues.

Mr. Duncan: Will the hon. Gentleman be chivalrous enough to give way?

Mr. Wilson: Of course.

Mr. Duncan: The hon. Gentleman challenges us, saying that there will be a huge bureaucracy. He will be amused to know that I have a little list of his own policy proposals on how to administer the railways in the public sector. He proposes a new transport forum, new regional authorities for strategic planning, a new transport users' body, new passenger safety inspectorates, a disputes ombudsman, a consumer protection commission and a railway commission. How can the hon. Gentleman accuse us of wanting to create a bureaucracy when his policy document calls for far more bureaucracy than our proposals would ever create? [HON. MEMBERS: "Hear, hear."]

Mr. Wilson: It does not matter how much Conservative Members baa their approval The argument advanced by the hon. Member for Rutland and Melton (Mr. Duncan) is very weak. I must make an admission: I would not know how to run up a £50 billion public sector borrowing requirement even if I wanted to, and I do not. If the hon. Gentleman reads our document, he will find that our proposals come within the existing frameworks. If he really wants a fright, let him read the Government's policy documents and discover the range and number of quangos that they plan to put in place. The only spiritual and moral consolation that I can offer the hon. Gentleman is that there will probably be a few chairmen's jobs for his friends.
We shall have more bureaucracy, fewer services, more freight on the roads, higher fares and no railcards. That is the prospectus on offer. The debate is not ending; it is beginning.

The Minister for Public Transport (Mr. Roger Freeman): Some 22 right hon. and hon. Members have spoken in the debate, and I shall try to respond to all the points that have been made. On those that I cannot cover—in particular, those raised by the right hon. Member for Strangford (Mr. Taylor) and the hon. Members for York (Mr. Bayley) and for Ynys Môn (Mr. Jones)—I shall write to the hon. Members concerned.
Let me correct the hon. Member for Cunninghame, North (Mr. Wilson), who opened his winding-up speech by saying that Conservative Members had sought to denigrate British Rail. No Conservative Member has criticised Sir Bob Reid or the management of British Rail.

We have merely said that we can get a better quality railway system by bringing in the private sector. My hon. Friend the Member for Rutland and Melton (Mr. Duncan) was right to point out the complicated bureaucratic nature of the proposals published by the Labour party yesterday, and I shall illustrate that point.
The Select Committee rightly raised a number of unresolved issues. I shall deal briefly with five of the key issues. The first concerns franchising and open access. My right hon. Friend the Secretary of State has dealt with that by saying that, in respect of the first franchises, there may have to be a degree of exclusivity.

Mr. Prescott: A monopoly.

Mr. Freeman: No, not a monopoly. The competition will come from the private sector in the form of competition for the franchises. We do not rule out open access for some services, passenger or freight. We want a coherent railway system. My right hon. Friend the Secretary of State has responded positively on that matter.
Secondly, on the separation of track and operations—the important matter raised by my hon. Friends the Members for Orpington (Mr. Horam) and for Christchurch (Mr. Adley)—there is room for argument on both sides. The Government have reached a clear conclusion. I will put to my hon. Friend the Member for Christchurch three questions concerning his proposal for large, vertically integrated, regionally-based franchises. First, how does one control access to those railway companies? That would be very difficult. In the late 19th century, when the House sought to legislate to encourage competition on the railway system, it found that railway companies controlling both infrastructure and operations were not keen to allow other rail operators on their tracks. Secondly, there is the difficulty of having a national, coherent track charging regime. Thirdly, infrastructure is extremely expensive. It is a little hard to accept that, in the early years of our reforms, private sector companies could be expected to come in and take responsibility not only for rolling stock but also for infrastructure.

Several hon. Members: rose—

Mr. Freeman: I have 22 hon. Members to reply to, and exactly 20 minutes in which to do so, so I shall not give way.
Fourthly, it is very difficult to contemplate how a national timetable and national control over train paths would be consistent with regional, vertically integrated companies.
The hon. Member for York rightly raised the question of network benefits. First, we are proposing that Railtrack should be responsible for producing a national timetable, as it will be responsible for controlling train paths. Secondly, we have said that it will be mandatory for rail operators to ensure through ticketing. Finally, on the question of discounts, the disabled card is the only genuinely socially necessary card. All the others were introduced by British Rail for commercial reasons—to increase the number of passengers on the railway network. Ministers do not direct British Rail to introduce railcards, and there is no evidence to indicate that, with the advent of private sector operation, cards will disappear.
My hon. Friends the Members for Southport (Mr. Banks), for Newbury (Mrs. Chaplin) and for Christchurch


asked about investment, as did the hon. Member for Cunninghame, North (Mr. Wilson). On the question of infrastructure, I can confirm that Railtrack, as a public sector body—which is what it will be initially—will be funded in exactly the same way as British Rail. It will have access to the national loans fund for its investment requirements and, in the case of the west coast main line, for tracks and signalling. It will be the responsibility not only of British Rail but of its successor, Railtrack, to ensure that investment is made. British Rail will make a start.

Mr. John McAllion: rose—

Mr. Freeman: I have made it quite clear that I shall try to answer all the questions that hon. Members have put. I now have 19 hon. Members to reply to, and the hon. Gentleman is taking up time that should be spent on replies.

Mr. McAllion: rose—

Mr. Freeman: The hon. Gentleman has not been here during the debate.
The west coast main line infrastructure is badly needed, and I hope that in the next year British Rail will make a start on the resignalling work. That responsibility will continue under Railtrack.
My hon. Friend the Member for Newbury talked about rolling stock—an extremely important matter. We have asked British Rail, by Easter, to identify the lines—they may well include in the South Yorkshire PTE area the lines that the hon. Member for Morley and Leeds, South (Mr. Gunnell) mentioned—on which the £150 million of additional resources for rolling stock procurement will be spent. That money will provide additional orders for the rolling stock manufacturers, and we want British Rail to continue to order rolling stock beyond that point. However, we need to see a private sector leasing market develop. I am convinced that, as my hon. Friend the Member for Newbury indicated, the Government will have to assist that development, as no such market exists at present.
As I have indicated to the hon. Member for York, I shall be very happy to meet representatives of the large manufacturing company in his constituency, as well as of GEC Alsthom, immediately, now that we have issued our document on rolling stock procurement, to seek their participation in the early development of a leasing market. We must maintain a high level of investment in our railway system, and we are quite convinced that the private sector can come in. As my hon. Friend the Secretary of State said at the beginning of the debate, this will be supplemental to very great public sector support.
My hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) asked what steps the Government were taking to develop the rail freight industry. My right hon. Friend the Secretary of State made some very important announcements, which were welcomed by hon. Members in all parts of the House, but particularly by those on the Conservative Benches. He said that for our new regime, when Railtrack is introduced, rail freight operators will be asked to pay as a minimum the

avoidable track costs—the marginal costs. That regime has applied hitherto in this country and it is favourable to the development of a rail freight industry.
But the Secretary of State said that we would introduce a grant regime to pay the track costs of rail freight operators where that could be justified, and that was welcomed on the Conservative Benches. We have said that we intend to expand the section 8 grant scheme, including giving benefit to the calculation of motorway and trunk road miles avoided by freight which is carried by rail as opposed to road.
As for combined transport, we have said that we shall issue a consultation document shortly to give a concession to lorries carrying 44 tonnes on six axles for the carriage of freight to rail terminals. I assure my hon. Friends who represent Kent constituencies that that concession will not apply in Kent because the channel tunnel will not be regarded as a rail terminal. We are directing the concession principally at the nine channel tunnel railheads throughout the country.
I come to the announcement made by the Secretary of State about the seven lines which are to be prepared for franchising in 1994. They are the InterCity east coast, the InterCity Great Western, ScotRail, the south western division of Network SouthEast, London, Tilbury and Southend, the Victoria-Gatwick express and the Isle of Wight line. I have noted the warm support from Conservative Members for the selection of those franchises. Four specific questions have been asked—

Mr. McAllion: rose

Mr. Freeman: I am seeking to answer the debate.

Mr. McAllion: Will the Minister give way?

Madam Speaker: Order. It must be obvious to the hon. Member for Dundee, East (Mr. McAllion) that the Minister is not giving way.

Mr. Freeman: I am doing the House the courtesy of seeking to answer the debate.
My hon. Friends the Members for Cheadle (Mr. Day) and for St. Ives (Mr. Harris) have raised with me, either in the debate or separately, their natural concern about the prospect of a franchising system causing lines to close and services to end. I wish to make it absolutely clear that we intend the franchising director, when he is appointed, to start franchising with the existing timetable and existing services. My right hon. Friend the Secretary of State has today published a map showing precisely the routes, which include Penzance, Aberdeen and Inverness.

Mr. Day: I am grateful to the Minister for dealing with the points that I raised. May I have an assurance that where passenger transport executives or passenger transport authorities exist the Bill will not affect their existence or in any way affect the structure of subsidies that the regime implies?

Mr. Freeman: I can give those assurances, and in Committee we can go into those issues in detail. We propose no change to the responsibility of the PTAs and PTEs.
My right hon. Friends the Members for Tonbridge and Malling (Sir J. Stanley) and for Mid-Sussex (Mr. Renton) raised their concerns about increasing fares on lines which are franchised, and even those that are not. I am grateful that my right hon. Friend the Member for Tonbridge and


Malling has at least suspended judgment on the matter, and I will explain briefly the logic of our position and why we believe that we have adequate controls over railway fares.
We have said that franchising will be based on the existing timetable. We shall have a competition to see whether the subsidy that we pay to British Rail to run the existing timetable can be provided more cheaply by the private sector. That might well be an advantage. We propose a cap on fares for those services which are a monopoly, and I can confirm that the commuting lines into London constitute a monopoly.
Network SouthEast fares have risen by an average of 2 per cent. above the retail price index over the last 10 years. In Committee we can go into the detail of how fares on Network SouthEast train services will be controlled.
I should say to my right hon. Friend the Member for Mid-Sussex that extra investment does not necessarily mean higher prices. If one takes airlines or long-distance coaches—

Madam Speaker: Order. I should be obliged if the Minister would use the microphone. I find it difficult to hear and we need his remarks to be recorded.

Mr. Freeman: I shall address my remarks to the microphone, Madam Speaker. Extra investment does not necessarily mean higher fares. One can have additional investment in transport infrastructure. If it is provided more efficiently, fares are controlled.
My hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) referred to the InterCity lines. We have proposed three initial franchises for InterCity services, but we have not ruled out continued use of the brand name. It is a successful brand name, but we have not ruled out co-operation by all InterCity services using and marketing that name.
We have taken no decision on the ultimate shape of the transfer of InterCity to the private sector. That is many years in the future. We have begun the process and on the west coast main line urgent decisions about infrastructure and replacement of rolling stock need to be taken and are better taken in the next 12 months, outside the franchising system.
My hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) raised the question of management and employee participation. I am glad to tell him that some 20 management-employee buy-out groups have expressed an interest in participating in the reform of the railway system and in franchising. That is welcome and is a vote of confidence by the staff in our reforms.

Mr. Wilson: What the Minister said about InterCity needs clarification. As I understand it, he said that franchising of all sections of InterCity was far in the future. Does that mean that there will be franchising of sections of InterCity and therefore that retention of InterCity for the foreseeable future is reasonable and logical? Would that be a reasonable interpretation?

Mr. Freeman: No, it is not reasonable at all. I was talking about sale, which is far in the future. Here we are talking about franchising initially three InterCity services.
I come now to the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his press statement—the three-page news release which constitutes a summary of the Labour party approach to reform of the railways.

Nothing that the hon. Gentleman has said, nor anything said by his hon. Friend who wound up, shakes my belief that the Labour party still believes in total state monopoly of British Railways, even the rail freight industry. Indeed, as my hon. Friend the Member for Rutland and Melton reminded us, we would end up with even more control, a national plan and a national railways commission. [Interruption.] The hon. Gentleman talks about nine quangos, but my right hon. Friend said that under our proposals the only new function is for the regulator. All the other functions are already operating. The Labour proposals call for greater state control and no role for the private sector. The core of the proposals is borrowing by British Rail not only for extra subsidy and extra staff, but for additional investment. The hon. Gentleman's document says, essentially, that British Rail should be allowed to borrow from the private sector and implies that that private sector borrowing should somehow be disregarded in the public sector borrowing requirement.

Mr. Prescott: The Minister must know from the autumn statement that my idea of a proportion of leasing agreement—namely, 10 per cent.—would be the only amount considered for the private sector borrowing requirement. That is exactly what the Chancellor has done. One does not have to count it all in the public sector borrowing requirement to borrow from the private sector.

Mr. Freeman: The hon. Gentleman has never understood public expenditure accounting rules. I quote from what he said in the supply day debate on 12 January at column 782:
The private sector will not participate
—that is to say, lend money—
without some guarantee from the public sector."—[Official Report, 12 January 1993; Vol. 216, c. 782.]
Any borrowing from the private sector would not only be more expensive than borrowing from the gilt-edged market, but it would be ultimately a public sector responsibility and therefore count as public expenditure. The hon. Gentleman is asking us to take private sector money when it is ultimately the responsibility of the taxpayer to ensure its repayment, but he does not want the active involvement or management participation of the private sector which will change the culture of British Rail. The hon. Gentleman's approach is disregard for the taxpayer and the consequences of borrowing, disinterest in rail freight and little reference to the passenger. In the Labour party's document I can find only two references to passengers. It is all about state monopoly and making sure that the passenger gets the service that British Rail wants to deliver.
In the supply day debate, my hon. Friend the Member for Christchurch rightly said:
I should like the Government to go about bringing in the private sector initiative, energy, ambition and imagination that all Conservative Members recognise are missing from the railway system at present"—[Official Report, 12 January 1993; Vol. 216, c. 809.]
That sums up accurately the view on the Conservative Benches. The hon. Member for Kingston upon Hull, East wants the private sector's money but does not want private sector participation. We want to end the British Rail monopoly and bring in the private sector in partnership with British Rail both in terms of finance and in terms of operating the railways sytem so that we can develop the railways system further.
I find it very hard to perceive a consistent line from the Liberal Democrat party. The Independent on 17 September 1992 stated:
Malcolm Bruce, the Liberal Democrat trade and industry spokesman, called on the party to support genuine competition that will increase choice and improve services and argued that co-operation between British Rail and outside is worth looking into, but Beth Graham from Skipton and Ripon told the conference that when she first saw the document she said, 'I thought it had got into the wrong envelope and should have been sent to the Conservative party delegate.'".
The leader and the trade and industry spokesman of the Liberal Democrat party are at variance not only with their party conference but with some of their colleagues.
We want to see the development of a modern, competitive railway system which will be competitive because we want the private sector to compete in the franchising process. Already some 50 companies and 20 management-employee buy-outs have expressed an interest in running the services. That demonstrates the degree of interest in our reforms, and we have said that we will support British Rail in providing financial incentives to management-employee groups in bidding not only for parts of the freight industry but for franchises. We want a reliable railway network and a change in the culture—

Mr. Prescott: Culture!

Mr. Freeman: The hon. Gentleman mocks it, but that is what our reforms will bring about.
We want there to be an attitude of mind that puts the passenger first—a "can do" attitude. My hon. Friends will support Government proposals which put the passenger first and will ensure that with the addition of investment and the participation of the management and employees of British Rail under new leadership, the quality of our railway system will be improved. The Opposition's approach is not to end the state monopoly, to make no change in the ownership of the rail system, but to have increased national planning and extra borrowing from the public sector. I ask all Conservative Members to support the Bill and I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 302, Noes 269.

Division No. 138]
[10 pm


AYES


Ainsworth, Peter (East Surrey)
Beresford, Sir Paul


Aitken, Jonathan
Biffen, Rt Hon John


Alison, Rt Hon Michael (Selby)
Blackburn, Dr John G.


Allason, Rupert (Torbay)
Body, Sir Richard


Amess, David
Bonsor, Sir Nicholas


Ancram, Michael
Booth, Hartley


Arbuthnot, James
Boswell, Tim


Arnold, Jacques (Gravesham)
Bottomley, Peter (Eltham)


Arnold, Sir Thomas (Hazel Grv)
Bottomley, Rt Hon Virginia


Ashby, David
Bowden, Andrew


Aspinwall, Jack
Bowis, John


Atkinson, Peter (Hexham)
Boyson, Rt Hon Sir Rhodes


Baker, Rt Hon K. (Mole Valley)
Brandreth, Gyles


Baker, Nicholas (Dorset North)
Brazier, Julian


Baldry, Tony
Bright, Graham


Banks, Matthew (Southport)
Brooke, Rt Hon Peter


Banks, Robert (Harrogate)
Brown, M. (Brigg &amp; Cl'thorpes)


Bates, Michael
Browning, Mrs. Angela


Batiste, Spencer
Bruce, Ian (S Dorset)


Bellingham, Henry
Budgen, Nicholas


Bendall, Vivian
Burns, Simon





Burt, Alistair
Hargreaves, Andrew


Butcher, John
Harris, David


Butler, Peter
Haselhurst, Alan


Butterfill, John
Hawkins, Nick


Carlisle, John (Luton North)
Hawksley, Warren


Carlisle, Kenneth (Lincoln)
Hayes, Jerry


Carrington, Matthew
Heald, Oliver


Carttiss, Michael
Heathcoat-Amory, David


Cash, William
Hendry, Charles


Channon, Rt Hon Paul
Heseltine, Rt Hon Michael


Chaplin, Mrs Judith
Higgins, Rt Hon Sir Terence L.


Churchill, Mr
Hill, James (Southampton Test)


Clappison, James
Hogg, Rt Hon Douglas (G'tham)


Clark, Dr Michael (Rochford)
Horam, John


Clarke, Rt Hon Kenneth (Ruclif)
Hordern, Rt Hon Sir Peter


Clifton-Brown, Geoffrey
Howard, Rt Hon Michael


Coe, Sebastian
Howarth, Alan (Strat'rd-on-A)


Congdon, David
Howell, Rt Hon David (G'dford)


Conway, Derek
Hughes Robert G. (Harrow W)


Coombs, Anthony (Wyre For'st)
Hunt, Rt Hon David (Wirral W)


Coombs, Simon (Swindon)
Hunter, Andrew


Cope, Rt Hon Sir John
Hurd, Rt Hon Douglas


Couchman, James
Jack, Michael


Cran, James
Jackson, Robert (Wantage)


Currie, Mrs Edwina (S D'by'ire)
Jenkin, Bernard


Curry, David (Skipton &amp; Ripon)
Jessel, Toby


Davies, Quentin (Stamford)
Johnson Smith, Sir Geoffrey


Davis, David (Boothferry)
Jones, Gwilym (Cardiff N)


Day, Stephen
Jones, Robert B. (W Hertfdshr)


Deva, Nirj Joseph
Jopling, Rt Hon Michael


Devlin, Tim
Kellett-Bowman, Dame Elaine


Dickens, Geoffrey
Key, Robert


Dorrell, Stephen
Kilfedder, Sir James


Douglas-Hamilton, Lord James
King, Rt Hon Tom


Dover, Den
Kirkhope, Timothy


Duncan, Alan
Knapman, Roger


Duncan-Smith, Iain
Knight, Mrs Angela (Erewash)


Dunn, Bob
Knight, Greg (Derby N)


Eggar, Tim
Knight, Dame Jill (Bir'm E'st'n)


Elletson, Harold
Knox, David


Evans, David (Welwyn Hatfield)
Kynoch, George (Kincardine)


Evans, Jonathan (Brecon)
Lait, Mrs Jacqui


Evans, Nigel (Ribble Valley)
Lamont, Rt Hon Norman


Evans, Roger (Monmouth)
Lang, Rt Hon Ian


Evennett, David
Legg, Barry


Faber, David
Leigh, Edward


Fabricant, Michael
Lennox-Boyd, Mark


Fairbairn, Sir Nicholas
Lester, Jim (Broxtowe)


Field, Barry (Isle of Wight)
Lidington, David


Fishburn, Dudley
Lilley, Rt Hon Peter


Forman, Nigel
Lloyd, Peter (Fareham)


Forsyth, Michael (Stirling)
Lord, Michael


Forth, Eric
Luff, Peter


Fowler, Rt Hon Sir Norman
Lyell, Rt Hon Sir Nicholas


Fox, Dr Liam (Woodspring)
MacGregor, Rt Hon John


Fox, Sir Marcus (Shipley)
MacKay, Andrew


Freeman, Roger
Maclean, David


French, Douglas
McLoughlin, Patrick


Gale, Roger
McNair-Wilson, Sir Patrick


Gallie, Phil
Madel, David


Gardiner, Sir George
Maitland, Lady Olga


Garel-Jones, Rt Hon Tristan
Major, Rt Hon John


Garnier, Edward
Malone, Gerald


Gill, Christopher
Mans, Keith


Gillan, Cheryl
Marland, Paul


Goodlad, Rt Hon Alastair
Marlow, Tony


Goodson-Wickes, Dr Charles
Marshall, John (Hendon S)


Gorman, Mrs Teresa
Marshall, Sir Michael (Arundel)


Gorst, John
Martin, David (Portsmouth S)


Grant, Sir Anthony (Cambs SW)
Mates, Michael


Greenway, Harry (Ealing N)
Mawhinney, Dr Brian


Greenway, John (Ryedale)
Mayhew, Rt Hon Sir Patrick


Griffiths, Peter (Portsmouth, N)
Mellor, Rt Hon David


Gummer, Rt Hon John Selwyn
Merchant, Piers


Hague, William
Milligan, Stephen


Hamilton, Rt Hon Archie (Epsom)
Mills, Iain


Hamilton, Neil (Tatton)
Mitchell, Andrew (Gedling)


Hampson, Dr Keith
Mitchell, Sir David (Hants NW)


Hanley, Jeremy
Moate, Sir Roger


Hannam, Sir John
Monro, Sir Hector






Montgomery, Sir Fergus
Spink, Dr Robert


Moss, Malcolm
Spring, Richard


Nelson, Anthony
Sproat, Iain


Neubert, Sir Michael
Squire, Robin (Hornchurch)


Newton, Rt Hon Tony
Steen, Anthony


Nicholls, Patrick
Stephen, Michael


Nicholson, David (Taunton)
Stern, Michael


Nicholson, Emma (Devon West)
Stewart, Allan


Norris, Steve
Streeter, Gary


Onslow, Rt Hon Sir Cranley
Sumberg, David


Oppenheim, Phillip
Sweeney, Walter


Ottaway, Richard
Sykes, John


Page, Richard
Tapsell, Sir Peter


Paice, James
Taylor, Ian (Esher)


Patnick, Irvine
Taylor, John M. (Solihull)


Patten, Rt Hon John
Taylor, Sir Teddy (Southend, E)


Pattie, Rt Hon Sir Geoffrey
Temple-Morris, Peter


Pawsey, James
Thomason, Roy


Peacock, Mrs Elizabeth
Thompson, Sir Donald (C'er V)


Pickles, Eric
Thompson, Patrick (Norwich N)


Porter, Barry (Wirral S)
Thurnham, Peter


Porter, David (Waveney)
Townsend, Cyril D. (Bexl'yh'th)


Portillo, Rt Hon Michael
Tracey, Richard


Powell, William (Corby)
Tredinnick, David


Redwood, John
Trend, Michael


Renton, Rt Hon Tim
Trotter, Neville


Richards, Rod
Twinn, Dr Ian


Riddick, Graham
Vaughan, Sir Gerard


Rifkind, Rt Hon. Malcolm
Waldegrave, Rt Hon William


Robathan, Andrew
Walker, Bill (N Tayside)


Roberts, Rt Hon Sir Wyn
Waller, Gary


Robertson, Raymond (Ab'd'n S)
Wardle, Charles (Bexhill)


Robinson, Mark (Somerton)
Waterson, Nigel


Roe, Mrs Marion (Broxbourne)
Watts, John


Rowe, Andrew (Mid Kent)
Wells, Bowen


Rumbold, Rt Hon Dame Angela
Wheeler, Rt Hon Sir John


Ryder, Rt Hon Richard
Whitney, Ray


Sackville, Tom
Whittingdale, John


Sainsbury, Rt Hon Tim
Widdecombe, Ann


Scott, Rt Hon Nicholas
Wiggin, Sir Jerry


Shaw, David (Dover)
Wilkinson, John


Shaw, Sir Giles (Pudsey)
Willetts, David


Shephard, Rt Hon Gillian
Wilshire, David


Shepherd, Colin (Hereford)
Winterton, Mrs Ann (Congleton)


Shersby, Michael
Wolfson, Mark


Sims, Roger
Wood, Timothy


Skeet, Sir Trevor
Yeo, Tim


Smith, Tim (Beaconsfield)
Young, Sir George (Acton)


Soames, Nicholas



Spencer, Sir Derek
Tellers for the Ayes:


Spicer, Sir James (W Dorset)
Mr. David Lightbown and


Spicer, Michael (S Worcs)
Mr. Sydney Chapman.

Question accordingly agreed to.

Motion made—[Mr. Prescott]—and Question put, That the Bill be committed to a Committee of the whole House:—

The House divided: Ayes 269, Noes 303.

Division No. 138]
[10 pm


AYES


Ainsworth, Peter (East Surrey)
Beresford, Sir Paul


Aitken, Jonathan
Biffen, Rt Hon John


Alison, Rt Hon Michael (Selby)
Blackburn, Dr John G.


Allason, Rupert (Torbay)
Body, Sir Richard


Amess, David
Bonsor, Sir Nicholas


Ancram, Michael
Booth, Hartley


Arbuthnot, James
Boswell, Tim


Arnold, Jacques (Gravesham)
Bottomley, Peter (Eltham)


Arnold, Sir Thomas (Hazel Grv)
Bottomley, Rt Hon Virginia


Ashby, David
Bowden, Andrew


Aspinwall, Jack
Bowis, John


Atkinson, Peter (Hexham)
Boyson, Rt Hon Sir Rhodes


Baker, Rt Hon K. (Mole Valley)
Brandreth, Gyles


Baker, Nicholas (Dorset North)
Brazier, Julian


Baldry, Tony
Bright, Graham


Banks, Matthew (Southport)
Brooke, Rt Hon Peter


Banks, Robert (Harrogate)
Brown, M. (Brigg &amp; Cl'thorpes)


Bates, Michael
Browning, Mrs. Angela


Batiste, Spencer
Bruce, Ian (S Dorset)


Bellingham, Henry
Budgen, Nicholas


Bendall, Vivian
Burns, Simon





Burt, Alistair
Hargreaves, Andrew


Butcher, John
Harris, David


Butler, Peter
Haselhurst, Alan


Butterfill, John
Hawkins, Nick


Carlisle, John (Luton North)
Hawksley, Warren


Carlisle, Kenneth (Lincoln)
Hayes, Jerry


Carrington, Matthew
Heald, Oliver


Carttiss, Michael
Heathcoat-Amory, David


Cash, William
Hendry, Charles


Channon, Rt Hon Paul
Heseltine, Rt Hon Michael


Chaplin, Mrs Judith
Higgins, Rt Hon Sir Terence L.


Churchill, Mr
Hill, James (Southampton Test)


Clappison, James
Hogg, Rt Hon Douglas (G'tham)


Clark, Dr Michael (Rochford)
Horam, John


Clarke, Rt Hon Kenneth (Ruclif)
Hordern, Rt Hon Sir Peter


Clifton-Brown, Geoffrey
Howard, Rt Hon Michael


Coe, Sebastian
Howarth, Alan (Strat'rd-on-A)


Congdon, David
Howell, Rt Hon David (G'dford)


Conway, Derek
Hughes Robert G. (Harrow W)


Coombs, Anthony (Wyre For'st)
Hunt, Rt Hon David (Wirral W)


Coombs, Simon (Swindon)
Hunter, Andrew


Cope, Rt Hon Sir John
Hurd, Rt Hon Douglas


Couchman, James
Jack, Michael


Cran, James
Jackson, Robert (Wantage)


Currie, Mrs Edwina (S D'by'ire)
Jenkin, Bernard


Curry, David (Skipton &amp; Ripon)
Jessel, Toby


Davies, Quentin (Stamford)
Johnson Smith, Sir Geoffrey


Davis, David (Boothferry)
Jones, Gwilym (Cardiff N)


Day, Stephen
Jones, Robert B. (W Hertfdshr)


Deva, Nirj Joseph
Jopling, Rt Hon Michael


Devlin, Tim
Kellett-Bowman, Dame Elaine


Dickens, Geoffrey
Key, Robert


Dorrell, Stephen
Kilfedder, Sir James


Douglas-Hamilton, Lord James
King, Rt Hon Tom


Dover, Den
Kirkhope, Timothy


Duncan, Alan
Knapman, Roger


Duncan-Smith, Iain
Knight, Mrs Angela (Erewash)


Dunn, Bob
Knight, Greg (Derby N)


Eggar, Tim
Knight, Dame Jill (Bir'm E'st'n)


Elletson, Harold
Knox, David


Evans, David (Welwyn Hatfield)
Kynoch, George (Kincardine)


Evans, Jonathan (Brecon)
Lait, Mrs Jacqui


Evans, Nigel (Ribble Valley)
Lamont, Rt Hon Norman


Evans, Roger (Monmouth)
Lang, Rt Hon Ian


Evennett, David
Legg, Barry


Faber, David
Leigh, Edward


Fabricant, Michael
Lennox-Boyd, Mark


Fairbairn, Sir Nicholas
Lester, Jim (Broxtowe)


Field, Barry (Isle of Wight)
Lidington, David


Fishburn, Dudley
Lilley, Rt Hon Peter


Forman, Nigel
Lloyd, Peter (Fareham)


Forsyth, Michael (Stirling)
Lord, Michael


Forth, Eric
Luff, Peter


Fowler, Rt Hon Sir Norman
Lyell, Rt Hon Sir Nicholas


Fox, Dr Liam (Woodspring)
MacGregor, Rt Hon John


Fox, Sir Marcus (Shipley)
MacKay, Andrew


Freeman, Roger
Maclean, David


French, Douglas
McLoughlin, Patrick


Gale, Roger
McNair-Wilson, Sir Patrick


Gallie, Phil
Madel, David


Gardiner, Sir George
Maitland, Lady Olga


Garel-Jones, Rt Hon Tristan
Major, Rt Hon John


Garnier, Edward
Malone, Gerald


Gill, Christopher
Mans, Keith


Gillan, Cheryl
Marland, Paul


Goodlad, Rt Hon Alastair
Marlow, Tony


Goodson-Wickes, Dr Charles
Marshall, John (Hendon S)


Gorman, Mrs Teresa
Marshall, Sir Michael (Arundel)


Gorst, John
Martin, David (Portsmouth S)


Grant, Sir Anthony (Cambs SW)
Mates, Michael


Greenway, Harry (Ealing N)
Mawhinney, Dr Brian


Greenway, John (Ryedale)
Mayhew, Rt Hon Sir Patrick


Griffiths, Peter (Portsmouth, N)
Mellor, Rt Hon David


Gummer, Rt Hon John Selwyn
Merchant, Piers


Hague, William
Milligan, Stephen


Hamilton, Rt Hon Archie (Epsom)
Mills, Iain


Hamilton, Neil (Tatton)
Mitchell, Andrew (Gedling)


Hampson, Dr Keith
Mitchell, Sir David (Hants NW)


Hanley, Jeremy
Moate, Sir Roger


Hannam, Sir John
Monro, Sir Hector






Montgomery, Sir Fergus
Spink, Dr Robert


Moss, Malcolm
Spring, Richard


Nelson, Anthony
Sproat, Iain


Neubert, Sir Michael
Squire, Robin (Hornchurch)


Newton, Rt Hon Tony
Steen, Anthony


Nicholls, Patrick
Stephen, Michael


Nicholson, David (Taunton)
Stern, Michael


Nicholson, Emma (Devon West)
Stewart, Allan


Norris, Steve
Streeter, Gary


Onslow, Rt Hon Sir Cranley
Sumberg, David


Oppenheim, Phillip
Sweeney, Walter


Ottaway, Richard
Sykes, John


Page, Richard
Tapsell, Sir Peter


Paice, James
Taylor, Ian (Esher)


Patnick, Irvine
Taylor, John M. (Solihull)


Patten, Rt Hon John
Taylor, Sir Teddy (Southend, E)


Pattie, Rt Hon Sir Geoffrey
Temple-Morris, Peter


Pawsey, James
Thomason, Roy


Peacock, Mrs Elizabeth
Thompson, Sir Donald (C'er V)


Pickles, Eric
Thompson, Patrick (Norwich N)


Porter, Barry (Wirral S)
Thurnham, Peter


Porter, David (Waveney)
Townsend, Cyril D. (Bexl'yh'th)


Portillo, Rt Hon Michael
Tracey, Richard


Powell, William (Corby)
Tredinnick, David


Redwood, John
Trend, Michael


Renton, Rt Hon Tim
Trotter, Neville


Richards, Rod
Twinn, Dr Ian


Riddick, Graham
Vaughan, Sir Gerard


Rifkind, Rt Hon. Malcolm
Waldegrave, Rt Hon William


Robathan, Andrew
Walker, Bill (N Tayside)


Roberts, Rt Hon Sir Wyn
Waller, Gary


Robertson, Raymond (Ab'd'n S)
Wardle, Charles (Bexhill)


Robinson, Mark (Somerton)
Waterson, Nigel


Roe, Mrs Marion (Broxbourne)
Watts, John


Rowe, Andrew (Mid Kent)
Wells, Bowen


Rumbold, Rt Hon Dame Angela
Wheeler, Rt Hon Sir John


Ryder, Rt Hon Richard
Whitney, Ray


Sackville, Tom
Whittingdale, John


Sainsbury, Rt Hon Tim
Widdecombe, Ann


Scott, Rt Hon Nicholas
Wiggin, Sir Jerry


Shaw, David (Dover)
Wilkinson, John


Shaw, Sir Giles (Pudsey)
Willetts, David


Shephard, Rt Hon Gillian
Wilshire, David


Shepherd, Colin (Hereford)
Winterton, Mrs Ann (Congleton)


Shersby, Michael
Wolfson, Mark


Sims, Roger
Wood, Timothy


Skeet, Sir Trevor
Yeo, Tim


Smith, Tim (Beaconsfield)
Young, Sir George (Acton)


Soames, Nicholas



Spencer, Sir Derek
Tellers for the Ayes:


Spicer, Sir James (W Dorset)
Mr. David Lightbown and


Spicer, Michael (S Worcs)
Mr. Sydney Chapman.




NOES


Abbott, Ms Diane
Boateng, Paul


Adams, Mrs Irene
Boyce, Jimmy


Ainger, Nick
Boyes, Roland


Ainsworth, Robert (Cov'try NE)
Bradley, Keith


Allen, Graham
Bray, Dr Jeremy


Alton, David
Brown, Gordon (Dunfermline E)


Anderson, Ms Janet (Ros'dale)
Brown, N. (N'c'tle upon Tyne E)


Armstrong, Hilary
Bruce, Malcolm (Gordon)


Ashton, Joe
Burden, Richard


Austin-Walker, John
Byers, Stephen


Barnes, Harry
Caborn, Richard


Barren, Kevin
Callaghan, Jim


Battle, John
Campbell, Mrs Anne (C'bridge)


Bayley, Hugh
Campbell, Menzies (Fife NE)


Beckett, Margaret
Campbell, Ronnie (Blyth V)


Beggs, Roy
Campbell-Savours, D. N.


Beith, Rt Hon A. J.
Canavan, Dennis


Bell, Stuart
Cann, Jamie


Benn, Rt Hon Tony
Chisholm, Malcolm


Bennett, Andrew F.
Clapham, Michael


Benton, Joe
Clark, Dr David (South Shields)


Bermingham, Gerald
Clarke, Eric (Midlothian)


Berry, Dr. Roger
Clarke, Tom (Monklands W)


Betts, Clive
Clelland, David


Blair, Tony
Clwyd, Mrs Ann


Blunkett, David
Coffey, Ann





Cohen, Harry
Janner, Greville


Connarty, Michael
Johnston, Sir Russell


Cook, Frank (Stockton N)
Jones, Barry (Alyn and D'side)


Cook, Robin (Livingston)
Jones, Ieuan Wyn (Ynys Môn)


Corbett, Robin
Jones, Lynne (B'ham S O)


Corbyn, Jeremy
Jones, Martyn (Clwyd, SW)


Corston, Ms Jean
Jowell, Tessa


Cousins, Jim
Keen, Alan


Cryer, Bob
Kennedy, Charles (Ross,C&amp;S)


Cunningham, Jim (Covy SE)
Kennedy, Jane (Lpool Brdgn)


Cunningham, Dr John (C'p'l'nd)
Khabra, Piara S.


Dafis, Cynog
Kilfoyle, Peter


Dalyell, Tam
Kinnock, Rt Hon Neil (Islwyn)


Darling, Alistair
Kirkwood, Archy


Davidson, Ian
Leighton, Ron


Davies, Bryan (Oldham C'tral)
Lestor, Joan (Eccles)


Davies, Rt Hon Denzil (Llanelli)
Lewis, Terry


Davies, Ron (Caerphilly)
Litherland, Robert


Davis, Terry (B'ham, H'dge H'l)
Livingstone, Ken


Dewar, Donald
Lloyd, Tony (Stretford)


Dixon, Don
Llwyd, Elfyn


Dobson, Frank
Lynne, Ms Liz


Donohoe, Brian H.
McAllion, John


Dowd, Jim
McAvoy, Thomas


Dunwoody, Mrs Gwyneth
McCartney, Ian


Eagle, Ms Angela
Macdonald, Calum


Eastham, Ken
McFall, John


Enright, Derek
McKelvey, William


Etherington, Bill
Mackinlay, Andrew


Evans, John (St Helens N)
McLeish, Henry


Ewing, Mrs Margaret
Maclennan, Robert


Fatchett, Derek
McNamara, Kevin


Fisher, Mark
McWilliam, John


Flynn, Paul
Madden, Max


Foster, Derek (B'p Auckland)
Mandelson, Peter


Foster, Don (Bath)
Marek, Dr John


Foulkes, George
Marshall, David (Shettleston)


Fraser, John
Martin, Michael J. (Springburn)


Fyfe, Maria
Martlew, Eric


Galbraith, Sam
Meacher, Michael


Gapes, Mike
Meale, Alan


Garrett, John
Michael, Alun


George, Bruce
Michie, Bill (Sheffield Heeley)


Gerrard, Neil
Michie, Mrs Ray (Argyll Bute)


Gilbert, Rt Hon Dr John
Milburn, Alan


Godsiff, Roger
Miller, Andrew


Golding, Mrs Llin
Mitchell, Austin (Gt Grimsby)


Gordon, Mildred
Moonie, Dr Lewis


Gould, Bryan
Morgan, Rhodri


Graham, Thomas
Morley, Elliot


Grant, Bernie (Tottenham)
Morris, Rt Hon A. (Wy'nshawe)


Griffiths, Nigel (Edinburgh S)
Morris, Estelle (B'ham Yardley)


Griffiths, Win (Bridgend)
Morris, Rt Hon J. (Aberavon)


Grocott, Bruce
Mowlam, Marjorie


Gunnell, John
Mudie, George


Hain, Peter
Mullin, Chris


Hall, Mike
Murphy, Paul


Hanson, David
Oakes, Rt Hon Gordon


Harman, Ms Harriet
O'Brien, Michael (N W'kshire)


Harvey, Nick
O'Hara, Edward


Hattersley, Rt Hon Roy
Olner, William


Henderson, Doug
O'Neill, Martin


Heppell, John
Orme, Rt Hon Stanley


Hill, Keith (Streatham)
Parry, Robert


Hinchliffe, David
Pendry, Tom


Hoey, Kate
Pickthall, Colin


Home Robertson, John
Pike, Peter L.


Hoon, Geoffrey
Pope, Greg


Howarth, George (Knowsley N)
Powell, Ray (Ogmore)


Howells, Dr. Kim (Pontypridd)
Prentice, Ms Bridget (Lew'm E)


Hoyle, Doug
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Prescott, John


Hughes, Robert (Aberdeen N)
Primarolo, Dawn


Hughes, Simon (Southwark)
Purchase, Ken


Hutton, John
Quin, Ms Joyce


Illsley, Eric
Radice, Giles


Ingram, Adam
Randall, Stuart


Jackson, Glenda (H'stead)
Raynsford, Nick


Jackson, Helen (Shef'ld, H)
Reid, Dr John


Jamieson, David
Robertson, George (Hamilton)






Robinson, Geoffrey (Co'try NW)
Straw, Jack


Roche, Mrs. Barbara
Taylor, Mrs Ann (Dewsbury)


Rogers, Allan
Taylor, Rt Hon John D. (Strgfd)


Rooker, Jeff
Taylor, Matthew (Truro)


Rooney, Terry
Tipping, Paddy


Ross, Ernie (Dundee W)
Turner, Dennis


Ross, William (E Londonderry)
Tyler, Paul


Rowlands, Ted
Vaz, Keith


Ruddock, Joan
Walker, Rt Hon Sir Harold


Salmond, Alex
Wallace, James


Sedgemore, Brian
Walley, Joan


Sheerman, Barry
Wardell, Gareth (Gower)


Sheldon, Rt Hon Robert
Wareing, Robert N


Shore, Rt Hon Peter
Watson, Mike


Short, Clare
Welsh, Andrew


Simpson, Alan
Wicks, Malcolm


Skinner, Dennis
Wigley, Dafydd


Smith, Andrew (Oxford E)
Williams, Rt Hon Alan (Sw'n W)


Smith, C. (Isl'ton S &amp; F'sbury)
Williams, Alan W (Carmarthen)


Smith, Rt Hon John (M'kl'ds E)
Wilson, Brian


Smith, Llew (Blaenau Gwent)
Winnick, David


Snape, Peter
Wise, Audrey


Soley, Clive
Worthington, Tony


Spearing, Nigel
Wray, Jimmy


Spellar, John
Wright, Dr Tony


Squire, Rachel (Dunfermline W)
Young, David (Bolton SE)


Steel, Rt Hon Sir David



Steinberg, Gerry
Tellers for the Noes:


Stevenson, George
Mr. Jon Owen Jones and


Stott, Roger
Mr. Gordon McMaster.


Strang, Dr. Gavin

Division No. 139]
[10.14 pm


AYES


Abbott, Ms Diane
Campbell, Menzies (Fife NE)


Adams, Mrs Irene
Campbell, Ronnie (Blyth V)


Ainger, Nick
Campbell-Savours, D. N.


Ainsworth, Robert (Cov'try NE)
Canavan, Dennis


Allen, Graham
Cann, Jamie


Alton, David
Chisholm, Malcolm


Anderson, Ms Janet (Ros'dale)
Clapham, Michael


Armstrong, Hilary
Clark, Dr David (South Shields)


Ashton, Joe
Clarke, Eric (Midlothian)


Austin-Walker, John
Clarke, Tom (Monklands W)


Barnes, Harry
Clelland, David


Barron, Kevin
Clwyd, Mrs Ann


Battle, John
Coffey, Ann


Bayley, Hugh
Cohen, Harry


Beckett, Margaret
Connarty, Michael


Beggs, Roy
Cook, Frank (Stockton N)


Beith, Rt Hon A. J.
Cook, Robin (Livingston)


Bell, Stuart
Corbett, Robin


Benn, Rt Hon Tony
Corbyn, Jeremy


Bennett, Andrew F.
Corston, Ms Jean


Benton, Joe
Cousins, Jim


Bermingham, Gerald
Cryer, Bob


Berry, Dr. Roger
Cunningham, Jim (Covy SE)


Betts, Clive
Cunningham, Dr John (C'p'l'nd)


Blair, Tony
Dafis, Cynog


Blunkett, David
Dalyell, Tam


Boateng, Paul
Darling, Alistair


Boyce, Jimmy
Davidson, Ian


Boyes, Roland
Davies, Bryan (Oldham C'tral)


Bradley, Keith
Davies, Rt Hon Denzil (Llanelli)


Bray, Dr Jeremy
Davies, Ron (Caerphilly)


Brown, Gordon (Dunfermline E)
Davis, Terry (B'ham, H'dge H'l)


Brown, N. (N'c'tle upon Tyne E)
Dewar, Donald


Bruce, Malcolm (Gordon)
Dixon, Don


Burden, Richard
Dobson, Frank


Byers, Stephen
Donohoe, Brian H.


Caborn, Richard
Dowd, Jim


Callaghan, Jim
Dunwoody, Mrs Gwyneth


Campbell, Mrs Anne (C'bridge)
Eagle, Ms Angela





Eastham, Ken
McFall, John


Enright, Derek
McKelvey, William


Etherington, Bill
Mackinlay, Andrew


Evans, John (St Helens N)
McLeish, Henry


Ewing, Mrs Margaret
Maclennan, Robert


Fatchett, Derek
McNamara, Kevin


Fisher, Mark
McWilliam, John


Flynn, Paul
Madden, Max


Foster, Derek (B'p Auckland)
Mandelson, Peter


Foster, Don (Bath)
Marek, Dr John


Foulkes, George
Marshall, David (Shettleston)


Fraser, John
Martin, Michael J. (Springburn)


Fyfe, Maria
Martlew, Eric


Galbraith, Sam
Meacher, Michael


Gapes, Mike
Meale, Alan


Garrett, John
Michael, Alun


George, Bruce
Michie, Bill (Sheffield Heeley)


Gerrard, Neil
Michie, Mrs Ray (Argyll Bute)


Gilbert, Rt Hon Dr John
Milburn, Alan


Godsiff, Roger
Miller, Andrew


Golding, Mrs Llin
Mitchell, Austin (Gt Grimsby)


Gordon, Mildred
Moonie, Dr Lewis


Gould, Bryan
Morgan, Rhodri


Graham, Thomas
Morley, Elliot


Grant, Bernie (Tottenham)
Morris, Rt Hon A. (Wy'nshawe)


Griffiths, Nigel (Edinburgh S)
Morris, Estelle (B'ham Yardley)


Griffiths, Win (Bridgend)
Morris, Rt Hon J. (Aberavon)


Grocott, Bruce
Mowlam, Marjorie


Gunnell, John
Mudie, George


Hain, Peter
Mullin, Chris


Hall, Mike
Murphy, Paul


Hanson, David
Oakes, Rt Hon Gordon


Harman, Ms Harriet
O'Brien, Michael (N W'kshire)


Harvey, Nick
O'Hara, Edward


Hattersley, Rt Hon Roy
Olner, William


Henderson, Doug
O'Neill, Martin


Heppell, John
Orme, Rt Hon Stanley


Hill, Keith (Streatham)
Parry, Robert


Hinchliffe, David
Pendry, Tom


Hoey, Kate
Pickthall, Colin


Home Robertson, John
Pike, Peter L.


Hoon, Geoffrey
Pope, Greg


Howarth, George (Knowsley N)
Powell, Ray (Ogmore)


Howells, Dr. Kim (Pontypridd)
Prentice, Ms Bridget (Lew'm E)


Hoyle, Doug
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Prescott, John


Hughes, Robert (Aberdeen N)
Primarolo, Dawn


Hughes, Simon (Southwark)
Purchase, Ken


Hutton, John
Quin, Ms Joyce


Illsley, Eric
Radice, Giles


Ingram, Adam
Randall, Stuart


Jackson, Glenda (H'stead)
Raynsford, Nick


Jackson, Helen (Shef'ld, H)
Reid, Dr John


Jamieson, David
Robertson, George (Hamilton)


Janner, Greville
Robinson, Geoffrey (Co'try NW)


Johnston, Sir Russell
Roche, Mrs. Barbara


Jones, Barry (Alyn and D'side)
Rogers, Allan


Jones, Ieuan Wyn (Ynys Môn)
Rooker, Jeff


Jones, Lynne (B'ham S O)
Rooney, Terry


Jones, Martyn (Clwyd, SW)
Ross, Ernie (Dundee W)


Jowell, Tessa
Ross, William (E Londonderry)


Keen, Alan
Rowlands, Ted


Kennedy, Charles (Ross,C&amp;S)
Ruddock, Joan


Kennedy, Jane (Lpool Brdgn)
Salmond, Alex


Khabra, Piara S.
Sedgemore, Brian


Kilfoyle, Peter
Sheerman, Barry


Kinnock, Rt Hon Neil (Islwyn)
Sheldon, Rt Hon Robert


Kirkwood, Archy
Shore, Rt Hon Peter


Leighton, Ron
Short, Clare


Lestor, Joan (Eccles)
Simpson, Alan


Lewis, Terry
Skinner, Dennis


Litherland, Robert
Smith, Andrew (Oxford E)


Livingstone, Ken
Smith, C. (Isl'ton S &amp; F'sbury)


Lloyd, Tony (Stretford)
Smith, Rt Hon John (M'kl'ds E)


Llwyd, Elfyn
Smith, Llew (Blaenau Gwent)


Lynne, Ms Liz
Snape, Peter


McAllion, John
Soley, Clive


McAvoy, Thomas
Spearing, Nigel


McCartney, Ian
Spellar, John


Macdonald, Calum
Squire, Rachel (Dunfermline W)






Steel, Rt Hon Sir David
Watson, Mike


Steinberg, Gerry
Welsh, Andrew


Stevenson, George
Wicks, Malcolm


Stott, Roger
Wigley, Dafydd


Strang, Dr. Gavin
Williams, Rt Hon Alan (Sw'n W)


Straw, Jack
Williams, Alan W (Carmarthen)


Taylor, Mrs Ann (Dewsbury)
Wilson, Brian


Taylor, Rt Hon John D. (Strgfd)
Winnick, David


Taylor, Matthew (Truro)
Wise, Audrey


Tipping, Paddy
Worthington, Tony


Turner, Dennis
Wray, Jimmy


Tyler, Paul
Wright, Dr Tony


Vaz, Keith
Young, David (Bolton SE)


Walker, Rt Hon Sir Harold



Wallace, James
Tellers for the Ayes:


Walley, Joan
Mr. Jon Owen Jones and


Wardell, Gareth (Gower)
Mr. Gordon McMaster.


Wareing, Robert N





NOES


Ainsworth, Peter (East Surrey)
Coombs, Anthony (Wyre For'st)


Aitken, Jonathan
Coombs, Simon (Swindon)


Alison, Rt Hon Michael (Selby)
Cope, Rt Hon Sir John


Allason, Rupert (Torbay)
Couchman, James


Amess, David
Cran, James


Ancram, Michael
Currie, Mrs Edwina (S D'by'ire)


Arnold, Jacques (Gravesham)
Curry, David (Skipton &amp; Ripon)


Arnold, Sir Thomas (Hazel Grv)
Davies, Quentin (Stamford)


Ashby, David
Davis, David (Boothferry)


Aspinwall, Jack
Day, Stephen


Atkinson, Peter (Hexham)
Deva, Nirj Joseph


Baker, Rt Hon K. (Mole Valley)
Devlin, Tim


Baker, Nicholas (Dorset North)
Dickens, Geoffrey


Baldry, Tony
Dorrell, Stephen


Banks, Matthew (Southport)
Douglas-Hamilton, Lord James


Banks, Robert (Harrogate)
Dover, Den


Bates, Michael
Duncan, Alan


Batiste, Spencer
Duncan-Smith, Iain


Bellingham, Henry
Dunn, Bob


Bendall, Vivian
Eggar, Tim


Beresford, Sir Paul
Elletson, Harold


Biffen, Rt Hon John
Evans, David (Welwyn Hatfield)


Blackburn, Dr John G.
Evans, Jonathan (Brecon)


Body, Sir Richard
Evans, Nigel (Ribble Valley)


Bonsor, Sir Nicholas
Evans, Roger (Monmouth)


Booth, Hartley
Evennett, David


Boswell, Tim
Faber, David


Bottomley, Peter (Eltham)
Fabricant, Michael


Bottomley, Rt Hon Virginia
Fairbairn, Sir Nicholas


Bowden, Andrew
Field, Barry (Isle of Wight)


Bowis, John
Fishburn, Dudley


Boyson, Rt Hon Sir Rhodes
Forman, Nigel


Brandreth, Gyles
Forsyth, Michael (Stirling)


Brazier, Julian
Forth, Eric


Bright, Graham
Fowler, Rt Hon Sir Norman


Brooke, Rt Hon Peter
Fox, Dr Liam (Woodspring)


Brown, M. (Brigg &amp; Cl'thorpes)
Fox, Sir Marcus (Shipley)


Browning, Mrs. Angela
Freeman, Roger


Bruce, Ian (S Dorset)
French, Douglas


Budgen, Nicholas
Gale, Roger


Burns, Simon
Gallie, Phil


Burt, Alistair
Gardiner, Sir George


Butcher, John
Garel-Jones, Rt Hon Tristan


Butler, Peter
Garnier, Edward


Butterfill, John
Gill, Christopher


Carlisle, John (Luton North)
Gillan, Cheryl


Carlisle, Kenneth (Lincoln)
Goodlad, Rt Hon Alastair


Carrington, Matthew
Goodson-Wickes, Dr Charles


Carttiss, Michael
Gorman, Mrs Teresa


Cash, William
Gorst, John


Channon, Rt Hon Paul
Grant, Sir Anthony (Cambs SW)


Chaplin, Mrs Judith
Greenway, Harry (Ealing N)


Churchill, Mr
Greenway, John (Ryedale)


Clappison, James
Griffiths, Peter (Portsmouth, N)


Clark, Dr Michael (Rochford)
Gummer, Rt Hon John Selwyn


Clarke, Rt Hon Kenneth (Ruclif)
Hague, William


Clifton-Brown, Geoffrey
Hamilton, Rt Hon Archie (Epsom)


Coe, Sebastian
Hamilton, Neil (Tatton)


Congdon, David
Hampson, Dr Keith


Conway, Derek
Hanley, Jeremy





Hannam, Sir John
Montgomery, Sir Fergus


Hargreaves, Andrew
Moss, Malcolm


Harris, David
Nelson, Anthony


Haselhurst, Alan
Neubert, Sir Michael


Hawkins, Nick
Newton, Rt Hon Tony


Hawksley, Warren
Nicholls, Patrick


Hayes, Jerry
Nicholson, David (Taunton)


Heald, Oliver
Nicholson, Emma (Devon West)


Heathcoat-Amory, David
Norris, Steve


Hendry, Charles
Onslow, Rt Hon Sir Cranley


Heseltine, Rt Hon Michael
Oppenheim, Phillip


Higgins, Rt Hon Sir Terence L.
Ottaway, Richard


Hill, James (Southampton Test)
Page, Richard


Hogg, Rt Hon Douglas (G'tham)
Paice, James


Horam, John
Patnick, Irvine


Hordern, Rt Hon Sir Peter
Patten, Rt Hon John


Howard, Rt Hon Michael
Pattie, Rt Hon Sir Geoffrey


Howarth, Alan (Strat'rd-on-A)
Pawsey, James


Howell, Rt Hon David (G'dford)
Peacock, Mrs Elizabeth


Hughes Robert G. (Harrow W)
Pickles, Eric


Hunt, Rt Hon David (Wirral W)
Porter, Barry (Wirral S)


Hunter, Andrew
Porter, David (Waveney)


Hurd, Rt Hon Douglas
Portillo, Rt Hon Michael


Jack, Michael
Powell, William (Corby)


Jackson, Robert (Wantage)
Redwood, John


Jenkin, Bernard
Renton, Rt Hon Tim


Jessel, Toby
Richards, Rod


Johnson Smith, Sir Geoffrey
Riddick, Graham


Jones, Gwilym (Cardiff N)
Rifkind, Rt Hon. Malcolm


Jones, Robert B. (W Hertfdshr)
Robathan, Andrew


Jopling, Rt Hon Michael
Roberts, Rt Hon Sir Wyn


Kellett-Bowman, Dame Elaine
Robertson, Raymond (Ab'd'n S)


Key, Robert
Robinson, Mark (Somerton)


Kilfedder, Sir James
Roe, Mrs Marion (Broxbourne)


King, Rt Hon Tom
Rowe, Andrew (Mid Kent)


Kirkhope, Timothy
Rumbold, Rt Hon Dame Angela


Knapman, Roger
Ryder, Rt Hon Richard


Knight, Mrs Angela (Erewash)
Sackville, Tom


Knight, Greg (Derby N)
Sainsbury, Rt Hon Tim


Knight, Dame Jill (Bir'm E'st'n)
Scott, Rt Hon Nicholas


Knox, David
Shaw, David (Dover)


Kynoch, George (Kincardine)
Shaw, Sir Giles (Pudsey)


Lait, Mrs Jacqui
Shephard, Rt Hon Gillian


Lamont, Rt Hon Norman
Shepherd, Colin (Hereford)


Lang, Rt Hon Ian
Shersby, Michael


Lennox-Boyd, Mark
Sims, Roger


Lester, Jim (Broxtowe)
Skeet, Sir Trevor


Lidington, David
Smith, Tim (Beaconsfield)


Lightbown, David
Soames, Nicholas


Lilley, Rt Hon Peter
Spencer, Sir Derek


Lloyd, Peter (Fareham)
Spicer, Sir James (W Dorset)


Lord, Michael
Spicer, Michael (S Worcs)


Luff, Peter
Spink, Dr Robert


Lyell, Rt Hon Sir Nicholas
Spring, Richard


MacGregor, Rt Hon John
Sproat, Iain


MacKay, Andrew
Squire, Robin (Hornchurch)


Maclean, David
Stanley, Rt Hon Sir John


McLoughlin, Patrick
Steen, Anthony


McNair-Wilson, Sir Patrick
Stephen, Michael


Madel, David
Stern, Michael


Maitland, Lady Olga
Stewart, Allan


Major, Rt Hon John
Streeter, Gary


Malone, Gerald
Sumberg, David


Mans, Keith
Sweeney, Walter


Marland, Paul
Sykes, John


Marlow, Tony
Tapsell, Sir Peter


Marshall, John (Hendon S)
Taylor, Ian (Esher)


Marshall, Sir Michael (Arundel)
Taylor, John M. (Solihull)


Martin, David (Portsmouth S)
Taylor, Sir Teddy (Southend, E)


Mates, Michael
Temple-Morris, Peter


Mawhinney, Dr Brian
Thomason, Roy


Mayhew, Rt Hon Sir Patrick
Thompson, Sir Donald (C'er V)


Mellor, Rt Hon David
Thompson, Patrick (Norwich N)


Merchant, Piers
Thurnham, Peter


Milligan, Stephen
Townsend, Cyril D. (Bexl'yh'th)


Mills, Iain
Tracey, Richard


Mitchell, Andrew (Gedling)
Tredinnick, David


Mitchell, Sir David (Hants NW)
Trend, Michael


Moate, Sir Roger
Trotter, Neville


Monro, Sir Hector
Twinn, Dr Ian






Vaughan, Sir Gerard
Willetts, David


Waldegrave, Rt Hon William
Wilshire, David


Waller, Gary
Winterton, Mrs Ann (Congleton)


Wardle, Charles (Bexhill)
Winterton, Nicholas (Macc'f'ld)


Waterson, Nigel
Wolfson, Mark


Watts, John
Wood, Timothy


Wells, Bowen
Yeo, Tim


Wheeler, Rt Hon Sir John
Young, Sir George (Acton)


Whitney, Ray



Whittingdale, John
Tellers for the Noes:


Widdecombe, Ann
Mr. Sydney Chapman and


Wiggin, Sir Jerry
Mr. James Arbuthnot.


Wilkinson, John

Question accordingly negatived.

Bill committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

Orders of the Day — BUSINESS OF THE HOUSE

Motion made, and Question put forthwith pursuant to Standing Order No. 14 ( Exempted business),

That, at this day's sitting, the Ways and Means Motion relating to the Railways Bill may be proceeded with, though opposed, until any hour.—[Mr. Lightbown.]

Question agreed to.

Orders of the Day — Railways Bill [Money]

Queen's Recommendation having been signified—

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of the following, namely—

(a) the remuneration of, and any travelling or other allowances payable under the Act to, the Regulator, the Franchising Director and any staff of the Regulator or the Franchising Director, any other sums payable under the Act to or in respect of the Regulator or the Franchising Director and any expenses duly incurred by the Regulator or the Franchising Director, or by any staff of the Regulator or the Franchising Director, in consequence of the provisions of the Act;
(b) any sums required by the Regulator for the payment of the remuneration of the chairman of a railway users' committee, any travelling or other allowances payable under the Act to such a chairman or to other members of such a committee, any sums payable by way of reimbursement of travelling or out-of-pocket expenses to members of a sub-committee of such a committee and any expenses incurred by such a committee;
(c) any sums required by the Secretary of State for making grants—

(i) to the Board or any wholly owned subsidiary of the Board, towards the expenditure of the Board or the subsidiary, as the case may be;
(ii) to any successor company which is for the time being wholly owned by the Crown, towards the expenditure of that company;
(iii) towards the provision of facilities which are to be provided by any person for or in connection with the carriage of goods by railway or inland waterway or the loading or unloading of goods carried or intended to be carried by railway or inland waterway;

(d) any sums required for the making by the Franchising Director of grants or other payments under or by virtue of the Act;
(e) any sums required by the Secretary of State for making grants or loans to a company in relation to which a railway administration order has been made;
(f) any sums required by the Secretary of State for making any payment in respect of an indemnity given under the Act to a person appointed to achieve the purposes of a railway administration order;

(g) any expenses incurred by the Treasury or the Secretary of State in acquiring securities of a successor company;
(h) any compensation payable by the Secretary of State in respect of compliance with directions given under the Act in time of hostilities, whether actual or imminent, severe international tension or great national emergency;
(i) any sums required by the Secretary of State for fulfilling guarantees given under the Act;
(j) any administrative expenses incurred by the Secretary of State or the Treasury in consequence of the provisions of the Act;
(k) any increase attributable to the Act in the sums payable out of money so provided under any other Act;

(2) the charging on, and issuing out of, the Consolidated Fund of any sums required by the Treasury for fulfilling guarantees given under or by virtue of the Act;
(3) the payment out of the National Loans Fund of any sums required by the Secretary of State by virtue of the Act for making loans to—

(a) any wholly owned subsidiary of the Board; or
(b) a successor company which is for the time being wholly owned by the Crown;

(4) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities—

(a) of the Board, in respect of loans made to the Board under section 20 of the Transport Act 1962, or
(b) of a successor company which is for the time being—

(i) a wholly owned subsidiary of the Board, or
(ii) wholly owned by the Crown, in respect of any loans,

as the Secretary of State may by order extinguish.— [Mr. Lightbown.]

10-25 pm

Sir Teddy Taylor: This is a desperately important point—a small point, but one that the Government must answer. My railway line has been privatised. As other hon. Members will know, the Secretary of State said that, for the first time on a privatisation issue, the Transfer of Undertakings (Protection of Employment) Regulations 1981 would apply. That means that a private undertaking will have to keep every employee whom it takes over, and will have to guarantee the wages of every existing employee. That is being done only because of the regulations, which are a direct consequence of a European directive that the Government were obliged to accept, against their wishes. Hon. Members who become excited about the social chapter should appreciate that, for the first time, we are saying to any privatised firm, "You must keep"—

Madam Speaker: Order. I should be obliged if the hon. Gentleman would identify the part of the motion to which he is referring.

Sir Teddy Taylor: I am referring to paragraph (2), which refers to the extra cash that will be involved. It is a simple point on which we must receive an answer. The Government will be faced with an enormous additional cost.
As you will know, Madam Speaker, infraction proceedings were taken against us because formerly this applied only to commercial undertakings, but it now applies to local services and privatisation ventures. According to the proceedings, we had to agree that transfers not involving the transfer of property were covered, that non-commercial undertakings were covered, and that compensation for failure to consult could not be offset against wages or presented in lieu of notice. The only point not accepted by the Government is that those rights


should apply to all employees. I think that that is amazing. Here we have a Conservative Government saying that rights forced on us by the European Community against our wishes should apply only to trade unionists. What that means to the Southend line—

Mr. Eric Martlew: Is the hon. Gentleman suggesting that everyone who works on the railways in his constituency should join a trade union?

Sir Teddy Taylor: The hon. Gentleman must accept that this is a serious point. We are being forced, whether we like it or not, for the first time to use extra public funds to ensure continuity of employment and guaranteed wages for a privatisation venture, and it is relevant to paragraph (2) of the motion.
Although we have no social chapter, the Government are saying that the only people to whom they will not give the money are those who are not members of trade unions. What do I tell the workers on the Southend line in my constituency? Presumably I am to tell them, "If you are a trade unionist, you need not worry about your job; it is guaranteed. You need not worry about your wages either. But, if you are not a trade unionist, we will kick you out of the door and offer you nothing"—and that will be that.

Mr. Martlew: I repeat the question: is the hon. Gentleman telling his constituents that if they are not members of the rail trade unions, they should join—and quickly?

Sir Teddy Taylor: This is not funny but desperately serious. We are talking about a new law that is being forced on Britain against our wishes. Instead of what happened under previous privatisations, which allowed the new employer to employ whom he wanted and to introduce new techniques, the employer is now being forced to take existing workers and to guarantee their wages.
What am I to say to my workers on the Southend line? Because of a statement made in Committee last Thursday by the Minister of State for Employment, I must tell them that if they are trade unionists, their jobs will be guaranteed with the new employer and their wages guaranteed, but if they are not trade unionists, we can offer them nothing. Am I therefore to tell my workers that, under paragraph (2) of the money resolution, the Conservative Government are saying that we shall pay for them if they are trade unionists but that if they are not trade unionists, they have no rights or prospects.
This is a desperately serious point. Public funds are involved. The Government are saying that, with these funds, they will subsidise the guarantee of employment and wages if workers are trade unionists but that they will not give the same rights to people who are not.

Mr. Brian Wilson: Will the hon. Gentleman give way?

Sir Teddy Taylor: I shall not take an intervention from the hon. Gentleman, who merely wants to make trouble and is not interested in people or rights.
How much money will be involved in guaranteeing the jobs, wages and conditions of my trade union members working for the Fenchurch Street line? How much money will be saved by telling people who are not trade unionists that the Conservative Government will do nothing for them and are not prepared to accept the final proposal?
In my 28 years in the House, I never thought that I would live to see the day when a Conservative Government would say that they will guarantee everything to trade unionists and pay extra cash, but that people who are not trade unionists have no rights or future. While I accept that the Bill will probably do some good for the Fenchurch Street line and that the Minister of State is a conscientious and sincere Minister who is doing his best, how can we, as Conservative Members, agree that trade unionists will have rights but that people who are not have no rights at all? That is wrong and completely contradicts everything that the Conservative party stands for. Why on earth should we agree to pass a law which goes against all that we stand for?
The Secretary of State passed over the issue with one sentence, saying that the transfer of undertakings regulations will apply. The Minister of State must deal with this matter. How much money is involved, and why should we, as Conservative Members, give rights to trade unionists but none to people who think that they can protect their employment in other ways?

Mr. Bob Cryer: If the assertions made by the hon. Member for Southend, East (Sir T. Taylor) are correct, I am sure that my party will welcome the proposal. However, I suspect that they are not true. They sound superior to the provisions of the social chapter in the Maastricht treaty. I shall look forward with great interest to the Minister's response.
I shall make four brief points. First, paragraphs (1)(a) and (b) of the money resolution relate to the financial provisions of the rail regulator and the franchising director. The Government's extraordinary position is that they will be paying out up to £15 million a year on an increase in bureaucracy. The money resolution and the explanation at the beginning of the Bill mean that the Government will be paying up to £15 million a year and employing 300 extra people but no additional benefits are specified for the passengers about whom the Minister spoke when winding up.
It is worth considering the £15 million per year that the Government are so lightly casting away. The Minister of State refused to provide a guarantee for the leasing of rolling stock on the electrified section from Leeds to Bradford and the Aire Valley. As a result of that lack of guarantee, the Minister knows full well that the rolling stock on the electrified section will be not second-hand but ninth or tenth-hand. The threat of privatisation means that financial institutions are not prepared to provide finance for the building of the electrified rolling stock on that section of railway. The lack of finance means that the first job losses are in the offing at the Hunslet Engineering Company, which would have built the rolling stock if the privatisation proposals had not been forthcoming and the Treasury had provided a guarantee. The Bill that the Minister is supporting tonight is the means whereby jobs will be lost in the railway industry at Leeds and, as was shown clearly during the main debate, throughout the rest of the rolling stock and locomotive-building industries. The £10 million to £15 million provided for in paragraphs (1)(a) and (b) of the money resolution for the rail regulator and the franchising director is real money.
As outlined by the Secretary of State, the east coast main line will be one of the first lines to be franchised. The


electrification of the east coast main line has cost the taxpayer about £500 million. It is no wonder that it is on the first list of sections of railways to be franchised. It is the most modern and most invested section of British Railways and provides an excellent service. It is doing perfectly well. There is no need to franchise it, unless the friends of the Tory party want to line their pockets from increased passenger fares. [Interruption.] There is no other rational explanation. The service cannot be improved. The Minister of State made it clear in his speech that the Government had no criticisms of British Rail. The service on the east coast main line has received investment of £500 million and is first rate. We are talking about extension of a service which could not be financed because of the threat of privatisation. The money provided for in the money resolution is being thrown away on increased bureaucracy in the offices of the rail regulator and the franchising director.
My second point relates to clause 122 in the Bill, which covers financial assistance to employee buy-outs. That financial assistance covers a wide range of activities, including the preparation of an employee buy-out. I have no doubt—the Minister of State may confirm this—that when employees get together they will employ consultants. Consultants are a growth industry. Some consultants want fees of £250,000 or £500,000. Such fees will be paid by the taxpayer. Clause 122 covers the whole cost of financial assistance to employee buy-outs. Such financial assistance might well cover vertical buy-outs such as buying the track, the rolling stock, the maintenance depots and all the infrastructure complete.
What sort of money is envisaged under clause 122? Will it be £10 million, £20 million or £30 million, or even £100 million, £200 million, £300 million or £400 million? What sort of limit is being set? There is no indication of that in the money resolution. Where an assisted bidder is successful, the money will be recoverable, but where an assisted bidder is not successful, it will be lost in a big black hole of expenditure financed by the taxpayer. That is the position. I am very concerned about taxpayers' money—more so than the Government, it seems—and I want to know what sort of limit is to be set on expenditure under clause 122 and the associated provisions of the money resolution.

Mr. William Cash: Has the hon. Gentleman noted that, under clause 118, which relates to financial provisions, the power to give directions with respect to public service obligations would enable payments of up to £3,000 million
or such greater sum not exceeding £5,000 million as the Secretary of State may by order specify
to be made under those directions?

Mr. Cryer: I am grateful to the hon. Member for Stafford (Mr. Cash) for raising that matter, to which I was coming but with which I shall not now deal in detail. It is a matter of great importance. First, the directions should come before Parliament—there is no provision in the Bill for that—and should be subject to the affirmative resolution procedure. That would at least provide some degree of parliamentary accountability. Instead of that, the Government are granting a huge open-ended sum of money on the basis of a money resolution which, in the ordinary course of events, would go through on the nod.

Most Conservative Members were hoping that that was exactly what would happen tonight. There were the usual moans and groans when I rose to exercise some degree of scrutiny. Conservative Members talk about wanting to protect taxpayers' money, but in reality they are prepared to let billions of pounds go through on the nod. The hon. Member for Stafford has made a perfectly good point, but will his name be on the list in Hansard tomorrow of those who voted against the Bill? That is the acid test of an hon. Member's determination to protest at the flaws in a Bill.
My third point concerns railway administration orders made under clause 53 and covered by paragraph (1)(e) of the money resolution. Railway administration orders are the result of recognition by the Government that competition implies a race: the losers are the companies which are forced into liquidation and the winners are those which pick up the small companies, take them over, close them down or force them to the wall. That is the system that the Government appear to like, but in this instance things will not work in quite the same way. The Government know full well what competition means and, in the ordinary course of events, they do not mind. They do not mind if DAF goes to the wall, with 5,000 engineering jobs and a further 10,000 associated jobs at stake. That is part of competition. People will pick up the pieces. The company will be bought. The President of the Board of Trade told us that some jobs will be recoverable, but the rest will go to the wall.
In the case of the railways, however, such circumstances would result in a break in service. That does not happen with British Rail, which is bound to provide services. There has been continuity of service. If British Rail wants to close a line—even a link line on which a passenger service operates perhaps half a dozen times a year—it must use the long-established procedure and go through the Transport Users Consultative Committee. BR cannot close a line without the approval of the committee and the Secretary of State. So far, the system has worked pretty well, but the Government know that they are introducing a system under which a guarantee cannot be given, so railway administration orders are to be introduced. If a company cannot carry out its franchise—in other words, it is broke—the Government will provide loans and grants to enable the services to continue. It is a very curious system, and a complex negation of the philosophy that the Government apply outside this highly complex, difficult and crazy situation. The system that was applied to Leyland DAF is not to be applied to British Rail, where the Government are to give guarantees.
I hope that the Minister will reply comprehensively to the points raised at this stage. The ways and means motion has still to come and, as the Ministers knows, it is open-ended as regards time. If we decide that it should be examined in detail, the Government may have to resort to a closure motion. It depends entirely whether the Minister gives comprehensive answers at this stage. I hope that he has some idea of how much he is going to spend. The House of Commons is giving him authority to spend money. I do not believe that Governments should be given open-ended authority to spend. We should be told just what sort of expenditure the Government have in mind.

Mr. Barry Field: The hon. Gentleman has said that things have been run fairly well so far. He might be interested to look at the reply to a parliamentary question that I received last Friday, which reveals that


more than 500,000 people are entitled to concessionary travel on British Rail by virtue of present or past employment. I was told that British Rail does not know the cost of that scheme. If the cost of each journey were £5, £6 or £10, that would represent many millions of pounds per annum. I cannot accept the hon. Gentleman's assertion that things have been run fairly well so far, or that there has been proper accounting.

Mr. Cryer: It is very interesting and curious that the hon. Member is so concerned about expenditure by British Rail. No doubt he, like me, wants to know the expenditure involved under all the headings in the money motion—but neither is there any doubt that if there is a Division the hon. Gentleman will go into the Aye Lobby as instructed by the Whips. We do not need the hon. Gentleman's lessons about control of expenditure and whether British Rail is subject to such control, as it ought to be. Has the hon. Gentleman ever tabled a question about the mileage that Ministers cover each year in their concessionary cars? That would be a very interesting figure, but it might be too costly for the Minister to find out. Ministers like to hide information of that sort, whereas I am all in favour of rooting it out. I hope that, in this respect, the hon. Gentleman's zeal is as extensive as mine.

Mr. Nigel Spearing: rose—

Mr. Cryer: I do not want to be dragged too far down these byways, but I shall give way to my hon. Friend.

Mr. Spearing: The hon. Member for the Isle of Wight (Mr. Field) gave the impression that British Rail did not know the cost of a scheme. I hope that it was not the hon. Gentleman's intention to give an impression of inefficiency. Does he agree that, as trains are running anyway, it is likely that the actual cost of additional passengers is impossible to calculate? The accountant on the Front Bench may be able to confirm that, while an estimate is possible, an exact computation is not. That is the economy of British Rail.

Mr. Cryer: I am grateful to my hon. Friend for his elucidation.
I should like now to refer to the fact that the board's business is to be taken over by successor companies. The money motion gives the Minister power to provide, from the national loans fund, loans that the Secretary of State may then extinguish. That is a matter for concern. If the successor companies receive significant amounts of money by way of loans, the taxpayer will yet again have to foot the bill for realisation of the ideological fantasies of the railway lunatics on the Treasury Bench. Assets will be improved. The successor companies will take them over in pristine condition, not because of private investment—the wonderful icon of the Government—but by virtue of taxpayers' investment through the concession authorised by this money resolution.
Before the House is one of the longest money resolutions that I can recall seeing. Because this is a complicated Bill designed to apply a complicated, not to say daft, set of organisational attitudes, the Government have been anxious to cover every eventuality. I hope that the Minister will give a proper reply because we are not here just to cover the Government's idiosyncratic views. We are also here to ensure that they are not running away

with taxpayers' money. Because the Government are accountable, albeit to a limited degree, the Minister must answer the questions that hon. Members have asked.

Mr. Andrew Rowe: I wish to raise a few points for clarification, or consolation. Will the railways, as a result of the Bill and the money resolution, be freed from the tyranny of the annual accounting which has made it difficult for investment? I recall the chairman of British Rail saying that the biggest change from the private sector, from which he had come, was that whereas if, for whatever reason—even the weather—it did not suit a private company to invest, that was all right, but if he could not make an investment when he was running BR, he stood a chance of losing the money because of the way in which the Treasury did its accounting. Perhaps the Minister will comment on that.
There is much reference in the resolution to assets. The asset that worries my constituents most is that which is involved in keeping their local stations open. May we be assured that large numbers of local stations will not be closed because of the company's intention to maximise the use of the assets in non-railway ways?
There is power under the resolution to provide subsidy, which is essential to the commuters of Kent. On the other hand, there is anxiety locally lest we become a subsidy Cinderella and be an unglamorous part of the railway system, as we are at present. Does the Minister see better times ahead in that connection?
I was pleased to hear the Secretary of State take what I hope will be the first bold steps towards levelling the playing field between railways and motorways. Life for my constituents is almost intolerable just now because we have works on every road and on railways throughout the county. Hundreds of millions of pounds are being spent by BR on the railways and equal amounts are being spent by the Department of Transport on the motorways. The difference is that BR's money comes out of the total stock of BR's money—and the railways must choose between spending it that way or buying rolling stock—whereas money for the motorways comes from the taxpayer. In the latter case, people do not have to choose between buying motor cars and buses.
I think I heard the Minister say that the freight facilities grant will now take account of a notional sum for the number of lorries removed from the roads. That is an enormously welcome development, if it is true, and it is regrettable that it was not available when RailEurope's plans for the Kent rail link were under discussion. It would have had a considerable effect on the sums in that case. It is essential to Kent to have this equalisation of the playing field. We desperately need to take lorries off the roads. Some 70 per cent. of United Kingdom trade will pass to mainland Europe and by the end of the century the great majority of that will pass through Kent.
Finally, I ask my hon. Friend the Minister whether some of the money under this resolution will be made available to engineer the channel tunnel rail link, when it comes to environmentally protected standards. I understand that there is a good chance that the Kings Cross low-level station is about to be removed from the agenda. If that is so, there will be a massive saving, and I hope that I can be assured that some of that saving will be spent on making the channel tunnel rail link environmentally


friendly, because all the rumours I have heard suggest that the link will be anything but environmentally friendly because it will be stripped to the bone.
I hope that under this resolution no more money will be given to Union Rail, whose chairman has produced what is probably the most insulting remark that even the arrogant British Rail and its subsidiaries have been able to produce over the past few months: they have said that their project is so important that no parish council should be allowed to have an effect upon it. That is the kind of contempt for democracy that means that Union Rail should cease to have any money from the Government.

Mr. Simon Hughes: I should like to put several questions to the Minister. One was asked by the hon. Member for Mid-Kent (Mr. Rowe): whether the Government will undertake, if they are to authorise by this money resolution the expenditure or borrowing of so much money, to guarantee in every case that the highest environmental requirements will be met. The hon. Member referred to reports that, for example, on the channel tunnel rail link and elsewhere on these routes, there would not be the environmental safeguards originally proposed. If we are to commit so much money additionally, and to give the opportunity to borrow it, there is no excuse for not having the highest environmental standards.
There is an even shorter point which Ministers will anticipate from me. If it is expedient to spend so much money on doing something that most people in Britain do not want, and to borrow so much money for a proposal that they do not support, why is it not expedient either to give or to borrow money to make up the £70 million necessary to give the go-ahead for the Jubilee line?
If we are asked to authorise this expenditure, it seems to me mere peanuts to ask the Government to put their hands in their pockets for the money to give the Jubilee line extension the green light. It is a mere bauble. I will reserve my position on the money resolution until I have seen that green light and heard the chinking of cash from the Government. It could be a loan, if necessary. This money resolution provides an opportunity for the Minister to be popular in one bound.

Mr. William Cash: First, I should like to endorse the remarks of my hon. Friend the Member for Southend, East (Sir T. Taylor) about the employment provisions. There is absolute absurdity in a Conservative Government, in a nutshell, ending up protecting trade unionists at the expense of those who are not trade unionists.
I cannot for the life of me understand, even if one wanted to protect trade unionists, the idea that, with these liabilities contained in schedule 6 to the Bill, and under clause 118, in the transfer of undertakings provisions that go right to the heart of the money resolution, we should be protecting one kind of worker as compared with another. It does not make any sense. If it is going to be done at all, it should be done equally.
Having said that, I should like to refer to the way in which the subsidies will operate in relation to the money

resolution. I have already raised the issue with my hon. Friend the Minister. Although we have become used to not getting answers on Maastricht, perhaps we can have an answer on the money resolution about the implications of the new privatised rail system for the subsidies from the European Community under the European regulations.
My hon. Friend knows that the arrangements which are made through the European Community go back to the Transport Act 1968 and the European Council regulation of 1969, which was amended in 1991. They raise the question of the public service obligation, which is at the heart of the financial status of the privatised rail system.
I said in an intervention in the speech of the hon. Member for Bradford, South (Mr. Cryer) that directions given by way of compensation under the relevant clause would enable sums of between £3 billion and £5 billion to be given not merely by the Secretary of State, as has been the case so far, but also by the franchising director. That is a new dimension.
It struck me as interesting, to say the least, that the amount that the British Railways Board is allowed to borrow at the moment under the British Railways Board (Finance) Act 1991 is precisely the same as the amount of money that the franchising director is able to give by way of directions—the limit being £3 billion at the lower level and £5 billion at the upper level. If the franchising director is allowed that degree of power, we need to know how accountable the system will be. It is not simply a question of whether the Secretary of State has the power; the franchising director has it too.
I should also like an answer on what the European Transport Commissioner had to say about the privatisation of our rail system. I can assure you, Madam Deputy Speaker, that I am not going outside the money resolution, because the question of moneys payable to us through the European Community arises not only by way of borrowing but also by way of grants. Grants can come from the European Community to fulfil our public service obligations.
As I understand it, the European Transport Commissioner issued a threat that, if we privatised our rail system, we could not expect the same subsidies as other member states. That is an intolerable state of affairs. I may not be an enthusiast for subsidies, but I am damned if this country should receive an unfair allocation of its share of European moneys when the French, the Germans and the other countries in the European Community are receiving subsidies, and we, as a result of going down this route, are put in an unfair and unreasonable position vis-a-vis the other member states. I raised this point in the trans-European networks debate, and I received no reply. The Minister was on the Front Bench on that occasion, and I would like some clarification.
We are not talking about peanuts but about the payment of a massive amount of money from the European taxpayer, which is directly related to the manner in which the privatised rail arrangement is being worked out.
I take something of an interest in such matters, not least because my great great grandfather founded the London to Brighton railway in 1830—a great privatised railway, in the days when we did not have to unscramble the situation. Just as he inquired into the finances of George Hudson, the railway king and great monopolist, I should like to be sure


that we are going to make everyone, whether in the House or in the European Community, accountable for the vast sums of money that are being used in relation to the Bill.
I shall reserve my decision on the vote on the money resolution until I have heard the answers to those questions. I am as interested as the hon. Member for Peckham (Ms. Harman) in the Jubilee line, because my constituency is equally—

Madam Deputy Speaker (Dame Janet Fookes): Order. If the hon. Member wants to hear answers, he will have to give the Minister time to give them.

Mr. Cash: I am grateful, Madam Deputy Speaker. I have concluded my remarks.

The Minister for Public Transport (Mr. Roger Freeman): My hon. Friend the Member for Southend, East (Sir T. Taylor) asked about the Transfer of Undertakings (Protection of Employment) Regulations 1981, which deal with the transfer of conditions of employment. I can confirm that British railways are in exactly the same position as any other industry or employer. The regulations apply to the franchising of railway operations in the same way as they apply to changes in the private sector—for example, when one company is reorganised or merges with another. The provisions apply to all staff, whether or not they are members of trade unions.
My hon. Friend the Member for Southend, East is right when he draws a distinction between those staff who have a right to consultation and those who have not. I understand that the Minister responsible in the Department of Employment has recently made it clear that, in the Government's judgment, those consultation rights should only be extended to the recognised trade union.
As far as the Railways Bill is concerned, the railways are no different from any other enterprise, industry or business. The regulations apply across the board. I have noted carefully what my hon. Friend the Member for Southend, East had to say on the matter. If he will permit me, because it is important, I shall correspond with him after I have discussed the matter with my colleague in the Department of Employment.
The hon. Member for Bradford, South (Mr. Cryer) spoke about four issues. I shall see if I can answer him in the order that he mentioned them.
First, he pointed out that the £15 million for the cost of the franchising director, his staff and the regulator would cover approximately 50 per cent. of the cost of the new rolling stock. He and I both agree that new rolling stock is needed for the Leeds-Bradford electrification system. He may not have been in the Chamber when, in response to the speech by the hon. Member for Morley and Leeds, South (Mr. Gunnell), I gave an undertaking that I would meet the chairman of the West Yorkshire passenger transport authority, because it is possible that British Rail could use part of the new £150 million leasing facility to lease new rolling stock to come on to the electrification system. That is a matter for BR.
The hon. Member for Bradford, South asked about management and employee buy-outs. I confirm that the limit is £100,000 per management-employee group interested in organising a bid. Obviously, the total expenditure, which must come out of British Rail's

external financing limit, depends on the number of groups, but I said earlier—the hon. Gentleman may not have been here—that about 20 groups had expressed interest. Whether they will all move to the stage of requiring financial assistance for professional advice remains to be seen.
The hon. Member for Bradford, South also asked me about the budget under the railway administration orders. That will fall to the franchising director's budget, which is essentially the total of the passenger service obligation grant. The hon. Gentleman knows that that is approximately £1,000 million. We shall shortly set the sum for 1993–94. The franchising director—distributing public subsidy and accountable to this House through the Secretary of State—will have to find all the moneys that he provides for subsidised services, and he is accountable for them.
The hon. Gentleman asked me about loans to British Rail. There may be occasions when it is necessary to consider extinguishment. The channel tunnel preparations are an example. For various reasons—my hon. Friend the Member for Mid-Kent (Mr. Rowe) knows this better than anyone—British Rail has been engaged during the past three or four years in some abortive work. Debt moneys have accumulated because British Rail has had to spend money on acquiring properties and preparing for routes that are not being taken forward. It may be sensible under this Bill—I give no guarantees—to extinguish that debt because it carries interest and is a burden on the railways. British Rail itself made a decision about properties purchased and preparations made.
My hon. Friend the Member for Mid-Kent asked me specifically about the freight facilities grant. I can confirm to him that what we have announced tonight is the extension of the grant to cover the removal of freight from the roads, motorways and trunk roads, so it is a valuable addition. At the moment, as my hon. Friend knows, it covers only urban and rural roads, but if it is extended to motorways and trunk roads there is a possibility that more shippers of freight will be persuaded to ship by rail rather than by road.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) talked about the highest environmental standards.

It being three quarters of an hour after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question pursuant to Standing Order No. 14 (Exempted business).

Question agreed to.

Resolved,

That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of the following, namely—

(a) the remuneration of, and any travelling or other allowances payable under the Act to, the Regulator, the Franchising Director and any staff of the Regulator or the Franchising Director, any other sums payable under the Act to or in respect of the Regulator or the Franchising Director and any expenses duly incurred by the Regulator or the Franchising Director, or by any staff of the Regulator or the Franchising Director, in consequence of the provisions of the Act;
(b) any sums required by the Regulator for the payment of the remuneration of the chairman of a railway users' committee, any travelling or other allowances payable under the Act to such a chairman or to other members of such a committee, any sums


payable by way of reimbursement of travelling or out-of-pocket expenses to members of a sub-committee of such a committee and any expenses incurred by such a committee;
(c) any sums required by the Secretary of State for making grants—

(i) to the Board or any wholly owned subsidiary of the Board, towards the expenditure of the Board or the subsidiary, as the case may be;
(ii) to any successor company which is for the time being wholly owned by the Crown, towards the expenditure of that company;
(iii) towards the provision of facilities which are to be provided by any person for or in connection with the carriage of goods by railway or inland waterway or the loading or unloading of goods carried or intended to be carried by railway or inland waterway;

(d) any sums required for the making by the Franchising Director of grants or other payments under or by virtue of the Act;
(e) any sums required by the Secretary of State for making grants or loans to a company in relation to which a railway administration order has been made;
(f) any sums required by the Secretary of State for making any payment in respect of an indemnity given under the Act to a person appointed to achieve the purposes of a railway administration order;
(g) any expenses incurred by the Treasury or the Secretary of State in acquiring securities of a successor company;

(h) any compensation payable by the Secretary of State in respect of compliance with directions given under the Act in time of hostilities, whether actual or imminent, severe international tension or great national emergency;
(i) any sums required by the Secretary of State for fulfilling guarantees given under the Act;
(j) any administrative expenses incurred by the Secretary of State or the Treasury in consequence of the provisions of the Act;
(k) any increase attributable to the Act in the sums payable out of money so provided under any other Act;

(2) the charging on, and issuing out of, the Consolidated Fund of any sums required by the Treasury for fulfilling guarantees given under or by virtue of the Act;
(3) the payment out of the National Loans Fund of any sums required by the Secretary of State by virtue of the Act for making loans to—

(a) any wholly owned subsidiary of the Board; or
(b) a successor company which is for the time being wholly owned by the Crown;

(4) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities—

(a) of the Board, in respect of loans made to the Board under section 20 of the Transport Act 1962, or
(b) of a successor company which is for the time being—

(i) a wholly owned subsidiary of the Board, or
(ii) wholly owned by the Crown, in respect of any loans,

as the Secretary of State may by order extinguish.

Orders of the Day — Railways Bill (Ways and Means)

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise—

(a) the inclusion in licences granted under the Act of conditions requiring the rendering of payments to the Secretary of State or the Rail Regulator;
(b) the inclusion in franchise agreements, within the meaning of the Act, of conditions requiring the rendering of payments to the Director of Passenger Rail Franchising;
(c) the inclusion of provisions under which monetary penalties may be imposed on persons who contravene or fail to comply with conditions or requirements imposed by or under the Act;
(d) the imposition of charges to corporation tax by provisions relating to the taxation of persons who are transferors or transferees in relation to transfer schemes under the Act;
(e) the payment of sums into the Consolidated Fund or the National Loans Fund.— [Mr. Chapman.]

Mr. Nigel Spearing: On this not very usual motion for receipt of moneys it is clear that the Secretary of State intends to receive moneys for licences and a good many other issues. I wish to speak on three relatively short matters and I hope that the Minister will be able to give me a reply. I am glad to see that the Secretary of State is also here.
The first matter may not be strictly in order. The question is whether it is. The hon. Member for Mid-Kent (Mr. Rowe) mentioned Union Rail. I take it that in the ambit of the Act-to-be there will be some arrangement between the Government and Union Rail and that the latter will be paying some money into Government funds in respect of licences issued. The hon. Member for Mid-Kent mentioned the fact that Union Rail will be funded by public and private money. He also expressed some dissatisfaction about the relationships between Union Rail and its senior staff and the people in the area. He mentioned a parish council in Kent.
If this money is coming back from Union Rail when it becomes a private, floated firm under the Act, as I presume that it will, can the Minister use his powers to persuade those officials to liaise more courteously with the people on the route of the railway? When it is running, it will be paying money to the Government. At present the route has still to be decided, but I have heard from my local borough council that Union Rail officials are unwilling to go through the usual consultation procedures in a few weeks' time when the route has been made public.
I wish to express the grave dissatisfaction of the people in the Newham and Stratford area about this because it would be a major feature of the area and the Union Rail officials appear not to be very much concerned about the financial arrangements that they would make for such consultation. They will have to deal with the matter ultimately through a statutory instrument rather than a private Bill, which makes public relations on the spot even more important.
The second matter that I wish to raise—I am glad to see that the Secretary of State is here for it—is the question of payments of franchises into the Government funds in respect of this order. The Secretary of State comes from Norfolk. His local depot is, I think, Crown Point, Norwich. I received an answer from the Minister on 28 January which could well apply to that local depot of his.

I asked him what would happen when various franchisees of existing services shared maintenance depots and stabling yards, and what arrangements would be made; they would all have to pay money to the Government. The Minister courteously replied:
Where the depot concerned is dedicated to a passenger service which is to be let as a single franchise, the depot will usually be leased for the period of the franchise to the incoming franchisee. Where one franchisee will be the predominant user of the depot, he will usually acquire the lease subject to conditions requiring him to make facilities available to other operators. In some cases, it may be feasible to divide a depot into separate parts for use by different operators, or to lease a depot to a third party maintenance operator."—[Official Report, 28 January 1993; Vol. 217, c. 800.]
All those involved will be paying money to the Government.
I ask the Secretary of State, who is present today and who represents an important part of East Anglia, what will happen if Crown Point depot, Norwich has no fewer than two or three franchises? It is difficult enough to run as it is, as are those at Cambridge and Ilford. Years ago, they were all run under the single administration of the former Great Eastern railway. The finances and arrangments for lessees, sub-letting, and all the operational problems that will arise under the terms of the right hon. Gentleman's answer, the Bill and the ways and means motion could cause grave difficulty and disrupt the former Great Eastern railway services between InterCity and Regional Railways. Those services are already disrupted and already cause difficulties, as the Secretary of State's constituents know.
My next question on payments is more important than the others put together. As I understand it, under the motion, payments in respect of licences will be made to the Secretary of State or the rail regulator. That money has to come from somewhere. It will come from charges made by the franchiser for the traffic, whether freight or passenger, plus any money that the Secretary of State receives for necessary public services—he currently receives money for the buses. We shall start with the existing timetable, but that could be adjusted. An amount will be paid to Railtrack and an amount to the Secretary of State.
The Secretary of State and the Minister have repeatedly said, publicly and in answer to questions, that the franchiser will be more effective and efficient in his operation than existing British Rail. That is a hope rather than a proven fact. I asked a question, which was again courteously answered by the Minister. I asked him to identify
those services or operations which can be made more effective or efficient consequent to the enactment of the Railways Bill"—[Official Report, 28 January 1993; Vol. 217, c. 799.]
As a consequence of the ways and means motion, more money will be paid from those services—I see the Minister nodding. I received no precise answer, but was told:
All passenger and freight services should be capable of more effective or efficient operation as a result of our reform proposals."—[Official Report, 28 January 1993; Vol. 217, c. 800.]
I am a little foxed by that. It is a matter of hope and faith —not accountancy, on which the Minister is a known expert.
I want to ask the Minister an important question about efficiency and the income from which the money will be paid. An experienced railway person recently said to me, "Nigel, they will cut the wages and make the conditions more difficult—that is how they will improve efficiency."


According to that experienced person, the only scope for major efficiency increases and the only source for the funds was the efficiency that would result from reductions in labour costs and changes in the conditions of work and service. I do not know whether that is in the minds of the Government or of those currently preparing the franchises. I wondered whether it was, and I asked the Minister a question which he has not answered today.
I asked the Minister what consideration had been given to maintaining a single conciliation service consequent upon the implementation of the Railways Bill and what assessment had been made of the desirability of maintaining a single structure of training and qualifications for various grades of personnel—other than the funding, I said in qualification, of the internal training and supervision which will be required anyway. I presume that that will be done on some railway association basis because one would expect grades of personnel in training and matters of safety to be on a national basis. We would expect there to be a single national bargaining arrangement for those grades of skill, experience, knowledge and training, particularly for people in crucial positions such as signalmen and drivers on whom the lives of others depend.
Otherwise, one railwaycompany—one franchisee—might begin to undercut another. There would be a market, just as there is informally inside British Rail, but on a single level of payment qualification and returns.
That is an important financial matter because the payments which will have to be made to the Secretary of State, Railtrack and all the others, will be crucial to the financial profits that the franchisers are expected to earn. We all know that in railways—my hon. Friend the Member for Bradford, South (Mr. Cryer) will correct me if I am wrong—by far the largest expenditure, other than for Railtrack which is being dealt with separately, will be staff wages and salaries.
At this point, I conclude with a matter which both the Secretary of State and the Minister for Public Transport should bear in mind. In today's debate they have constantly used the word "culture". They are not particularly well informed on railway matters, although the Minister for Public Transport has learnt quite a lot in the past year or two, and I pay tribute to the personal care and attention that he has taken. There is and will be a railway culture. A railway requires those who operate it to have a particular way of life. I speak as a Member who has represented people working in two large railway depots—Old Oak Common on the Great Western, and Stratford on the former Great Eastern. Many of my former constituents and present constituents work in those areas.
Railway workers have 24-hour cycle. The railway is like a factory strung out over hundreds of miles where operatives are not in an office or workshop. They keep it going almost every day of the year except Christmas. That creates the sort of culture that is found among people who work together, sometimes in dangerous conditions, and who depend on one another for their own and their passengers' safety. They often come from families with the proud traditions of those who serve the railways.
There is a railway culture, and I put it to the House that it is a good, proper and useful culture which serves the passeners. I use the word "passengers" because they are

passengers and owners, not just customers, as they are referred to on the tannoy. The idea of being customers of a public service that we currently own is one that jars.
Conservative Members mistakenly believe that some of the things that they would like to see—which we would all like to see, but which do not always happen—are the fault of some trade union or Labour plot to hold up progress. There may have been some tiny grains of truth in that in the past, or even in the present, but it is largely a myth and a miasma. As to the culture among the conciliation grades—I use that word advisedly—before the public ownership of railways, the Association of Railway Companies got together and agreed with the National Union of Railwaymen historically as to the conciliation grades. A national machinery existed to deal with such matters.
In my experience—and, I am sure, in that of virtually all right hon. and hon. Members—if one meets railwaymen and their families, one knows of the attitude that railwaymen bring to their jobs. If there is a negative culture, it is with management, who have been forced into adopting certain attitudes and ways which have not been entirely healthy in the past few years. If there has been a negative attitude, it has been found among management, not in the conciliation grades.
When the Minister replies, I hope that he will give an assurance that neither he nor the franchise holders to whom he will grant licences are seeking greater efficiency not through better services but through lower costs, by providing lower returns to those who give their lives—often to the inconvenience of their families, because of non-social hours—to the service of the public in our great railway industry.

Mrs. Teresa Gorman: I congratulate my hon. Friend the Minister for Public Transport on offering to franchise the dreadful line that goes through my constituency. It could not possibly be run more inefficiently or unreliably than it is at present, so therefore—

Madam Deputy Speaker (Dame Janet Fookes): Order. Before the hon. Lady continues. I remind her that the resolution's subject is fairly narrow and does not allow for debate on general policy.

Mrs. Gorman: I was coming to the important point, Madam Deputy Speaker, that my hon. Friend the Minister will be aware that the Government have already promised £50 million to update that line. When my hon. Friend the Minister replies, I would like him to confirm that that money is still on the table and will be in addition to any other moneys allocated to that line.
As to through ticketing—which is another financial issue—will my hon. Friend confirm that the proposal will not in any wary harm bus companies that want to take on a franchise, and that they will not find themselves falling under the auspices of the Office of Fair Trading, which might otherwise consider that a monopoly was being developed?

Madam Deputy Speaker: Order. That issue is beyond the scope of this debate.

Mrs. Gorman: I understand, Madam Deputy Speaker. I have concluded my remarks.

Mr. A. J. Beith: I have two questions about the charges that can be imposed under the ways and means resolution. The first relates to the exceptionally large number of small concerns—many of them run voluntarily—embraced by the Bill.
It is not generally appreciated that clauses 6 and 7 of the Bill apply to every railway any description whatsoever—not just to British Rail but to the Tyne and Wear Metro; London Underground; the Ffestiniog railway; the Romney, Hythe and Dymchurch railway; the Tanfield railway; the Heatherstane Law railway; and the Keighley and Worth Valley railway—with which the hon. Member for Bradford, South (Mr. Cryer) is well associated. For that matter, clauses 6 and 7 apply also to the 9in gauge railway capable of carrying passengers that runs through a park or one that is erected on a temporary basis for a particular event, such as a model railway exhibiton. That still constitutes the running of a railway.
It follows that all railways embraced by clauses 6 and 7 can be the subject of charges imposed as part of the licence conditions by the Secretary of State or the regulator. Voluntary railways had no idea until the day that the Bill was published that it would embrace them, and they are concerned to know the charges and licence arrangements to which they will be subject.
From the day of Royal Assent, it will be an offence for those railways to run unless they have an exemption certificate or licence granted by the Secretary of State or the regulator. We do not know the charge that will be imposed for that certificate or licence. Will it be nominal—50p, say—or will it be related to the scale of operation of a big franchise holder, such as that which takes on the east coast main line and be many thousands of pounds? How is a small organisation such as the North Yorkshire Moors railway to find the money to pay such a charge, if it were that kind of figure?
Is it certain that, on payment of the charge, the exemption or licence will be issued immediately? These are railways that organise for the tourist trade each season, and will not necessarily know—even if they have paid the charge specified in the motion—that they will be free to operate when the operating season starts. What will be the position of voluntary model railway organisations that pay the charge but do not know whether they will receive a licence in time for children to ride on their trains on the day of the fete?
Although all that is embraced in the Bill, nothing said by the Minister has explained why all those railways are involved, or why they are to be subject to charges. In fact, I know why they are all involved: they are all involved in the Government's desperate attempt to prevent the Bill from becoming hybrid. The Government have taken every inch of railway track in the country into the scope of the Bill, and said, "Never mind; there will be licences and exemptions. You will be all right." The ways and means resolution, however, allows charges to be imposed with those licences.
In my view, none of those organisations should be charged a penny. What have they done to deserve it? They have simply set up trusts to run railways, often taking over railways abandoned by British Rail. They provide a popular and attractive tourist facility which is much admired by visitors to this country. Now they are being

told that they cannot operate unless they obtain the necessary exemption or licence from the Secretary of State or the regulator.
We are not talking here about light railway orders or safety provisions; those are covered separately in existing regulations. We are talking about an Act that will prevent operators from running any such railway unless they have satisfied the Secretary of State that they should have exemptions or licences—and, under this motion, he may impose a charge for a licence. Moreover, for all we know, he may take months to grant it.
The Minister may think that that is no problem. He may say that the Government had to include the provision to prevent the Bill from becoming hybrid. But he should know bureaucracies well enough to realise that that could become a significant obstacle to a great many organisations running the railways to which I have referred.
My second question about the charges that will be imposed under the ways and means resolution relates to operators who take on franchises for the main routes—for example, the east coast main line. Will the imposition of charges and the monetary penalties mentioned in paragraph (c)—penalties
imposed on persons who contravene or fail to comply with conditions or requirements imposed by … the Act"—
be used by the regulator as a means of maintaining quality of service? That is an important question.
We understand that Mr. Richard Branson is willing to take on the east coast main line if he can run a non-stop line from London to Edinburgh. That may be fine for people who wish to travel from London to Edinburgh, or vice versa; but it is not much consolation to the inhabitants of Berwick-upon-Tweed, Alnmouth, Newcastle, York, Northallerton, Durham or anywhere else between the two cities.
This afternoon, the Secretary of State made an important and relevant statement: he said that the franchises would be based on the existing timetable. From that we must conclude that all the stops that now exist at such places as Alnmouth and Berwick must be maintained by the franchisee. But what happens if the franchisee says, "I have had enough of this; I do not want my trains to stop at these places. I think that I might be able to get some more Edinburgh passengers if I go flying through all these stations"? Will he incur a monetary penalty under paragraph (c)? If not, has the regulator any other way of controlling a franchisee who starts to depart from the existing timetable?
I an not arguing that existing timetables are sacrosanct; indeed, the best argument for bringing private contractors on to the railways is the possibility of their adding services that are not on the existing timetable. We all know, however, that the reverse could easily happen: under these arrangements, stations that now have services may lose them. I want to know whether Ministers see the penalties referred to in the motion as a way of ensuring that franchisees provide services to all the stations that now have services on the line. If not, what will be the mechanism for ensuring continuing compliance with the responsibility to maintain the existing timetable?

Mr. William Cash: Will my hon. Friend the Minister be good enough to deal with some of the matters that I raised on the previous motion, as they apply to the ways and means resolution?

Mr. Bob Cryer: I too want to deal with the private railways established from the 1960s onwards. Some Tory Members may not think that the legislation is needlessly bureaucratic or that it will impose another layer of administration, but they are wrong.
The Keighley and Worth Valley light railway in which I happen to own five £10 shares, which have never paid a dividend—and I should reject it if they ever did—was established as a preservation society in 1962. It obtained a light railway order in 1967 and a transfer order in 1968. An inspection of the operation and rules of operating the railway was carried out under the chief inspecting officer, then Colonel J. R. H. Robertson. From 29 June 1968, that five-mile branch of railway has been operating safely in the metropolitan borough of Yorkshire. Over the years, it has developed a relationship with British Rail which gives it access to traffic that it obtains via the British Rail network. For example, it sometimes runs excursions from the Worth valley to various destinations, hauled in part by steam trains which are attractive and delight many people.
What will happen under these arrangements when the Rail Regulator will be responsible for administering railway licenses and approving access agreements? Clause 6 states:
No person shall … provide or operate any services for the carriege of passengers or goods by railway … own a network, a station or a light maintenance depot, or … provide any network services, station services or light maintenance services … unless he is authorised to do so by a licence or is exempt, by virtue of section 7".
The railway to which I referred has been operating for many years, largely on a voluntary basis. It will have made 25 years' of payments this year and will finally be purchased from British Rail. It would have been an abandoned line if it had not been taken over, and that is true for many railways, as the right hon. Member for Berwick-upon-Tweed (Mr. Beith) said.
I cite as examples the railway that runs from Sherringham to Holt, the North Yorkshire Moors railway, the Severn Valley railway and a dozen others. Incidentally, those railways followed the form of agreement negotiated between the Keighley and Worth Valley railway and British Rail way back in the early 1960s in order to bring to a successful conclusion the aim of reopening the lines.
All those railways are now subject to a licence. Will they operate as they do now? What if they have access to part of another railway? What does "access" mean? Does it mean running into goods yard as happens at Keighley and picking up wagons or coaches which have been transferred from British Rail to the Keighley and Worth Valley railway? That is access of a sort. It means that a separate licence will have to be given unless, under clause 7, the Secretary of State, who must consult the regulator, by order grants
exemption from the requirement to be authorised by licence to carry on such activities falling within section 6
to which I referred earlier.
It is fair to ask the Minister to say whether the Secretary of State is minded to produce an order once, or if, the Bill

is passed, to grant exemption for all the existing privately operated railways which have been established for a long time and after a struggle.
The Bill establishes an administrative superstructure which the privately operated railways can do without. They do not need the superstructure, because they come under the Health and Safety Executive. Any accidents must be reported.
The rules and operation of the railways are to the highest standards. There are no other standards. Railways cannot afford to be 50 per cent. safe. They must be 100 per cent. safe when they deal with passengers, four or five coaches weighing 120 tonnes and a locomotive weighing 50, 60 or 70 tonnes. They cannot afford half-measures. They have passed the test.

Mr. Paul Tyler: Is the hon. Gentleman aware that the Prime Minister announced today his wish to reduce the amount of bureaucracy? Are not the proposals a clear case of increased bureaucracy?

Mr. Cryer: I was about to make that point. Hon. Members might be interested to know that the Government produced 3,359 statutory instruments in 1992. The Government are supposed to be lifting regulations off the backs of people, although they produced more regulations in one year than any other Government in parliamentary history.
Will this ways and means motion, which is the ways and means of raising revenue for which the legislation provides, extract money from private railways which are run on a voluntary and democratic basis, in the case of the Keighley and Worth Valley light railway and many others, for the pleasure of those who run them and those who see them? I am sure that all hon. Members will agree that they are reasonable organisations. They are run properly and have the best aspirations. Why then should they be burdened?
Even if the Secretary of State makes an order, such an order is still highly qualified. The whole of page 7 and half of page 8 of the Bill relate to the qualifications which apply to the exemptions. I hope that the Minister can give an unequivocal guarantee tonight that, if the Bill is passed and the order-making powers are granted to the Minister, he will produce another instrument. Such regulations are required only under the terms of the Government's legislation. As a result of the ideological perversity of the Government, more regulations will be produced to keep the bureaucracy off the backs of railways which do not need it.

Mr. Spearing: Does my hon. Friend agree that the matter can be disassociated entirely from the general attitude on both sides of the House to the Bill? It is conceivable that such a proposal would result in British Railways staying intact.
The Association of Railway Preservation Societies is made up of charitable, educational and heritage organisations. There is no political difference across the House about them. I suggest that we all want to encourage them, within reason. Can my hon. Friend tell me whether there has been much consultation between the Association of Railway Preservation Societies and the Government, who pride themselves on consultation, before the matter was dealt with in the way he has described.

Mr. Cryer: So far as I am aware, there has been no consultation on the ways and means motion. That contrasts very much with the Transport and Works Act 1992. One of the curiosities of the proposals in the ways and means motion is that, according to the Government, the Transport and Works Act 1992 was designed to simplify the position for light railways—small railways with a gauge up to 4 ft 8½ in. Railways now have a gauge of about a metre or whatever.
I would be interested to hear the Minister's comments on the licensing and the revenue that derives from that. How can the Government reconcile this legislation with the Transport and Works Act 1992, which was designed to provide the Secretary of State with order-making powers to simplify the procedure and avoid private Bills being promoted to secure the operation of minor railways?
I hope that the Minister will reassure us on that point. I am not referring to the kernel of the Bill, the whole of which remains objectionable, but it would be valuable if the Minister gave an indication that it was not the intention to use the fee-levying power to impose an additional burden on the light railways.
I emphasise that many people have struggled hard to get the railways operating; they are not rich men and women's playthings. People have worked their guts out in their spare time—sometimes without much enthusiastic support from British Rail or anybody else. That was certainly true of the Keighley and Worth Valley railway. Local people thought that the idea of a group of people taking over a railway was barmy, but now everyone thinks that the whole thing is marvellous.
I hope that the Minister shares the view those railways are marvellous a chievements, that he will strive to the best of his ability—the Secretary of State can nod his head while the Minister is saying this—to avoid putting any further burdens on them, and that an order will be forthcoming.

Mr. Andrew Mackinlay: I wish to draw the attention of the House to paragraphs (b) and (c) of the motion. It seems legitimate to draw attention in particular to the absurdity of paragraph (b)—which deals with the rendering of payments to the Director of Passenger Rail Franchising—as it relates to at least one of the prospective franchises that were announced by the Secretary of State earlier today. I refer to the Tilbury-Southend line, in which my constituents have some considerable interest.
I say that that part of the motion is absurd because there will be no prospect whatever of payments being made to the Director of Passenger Rail Franchising by the people who are successful in landing—or who receive as a gift from the Government—the franchise for the line. It is, by general agreement, a totally clapped-out line which cannot generate revenue. To all intents and purposes, the Government will have to give it away. They will dress up the exercise, of course. They will no doubt find someone to take it off their hands.

Mr. Spearing: Public money.

Mr. Mackinlay: As my hon. Friend says, they will have to make public money available to keep the line ticking over. The tragedy is that it needs major public investment on a scale that the Government are not prepared to fund.

The consequence is that commuters from Essex to London will continue to have a totally inadequate form of transport for their recreation and to get to their work.
It should be made clear that a fraudulent prospectus is being offered to commuters on the Essex line. Their line cannot generate moneys to be paid to the Director of Passenger Rail Franchising. A public asset is to be given away so that the Government can shed their responsibilities and hide their failure to fund that railway line over a decade or more.
Both the Bill and the ways and means resolution disguise the fact that the Government are probably already scurrying around trying to cobble together something that they will describe as a management buy-out so that they can shed the line. The Director of Passenger Rail Franchising will not receive money as a consequence of the franchising of the Tilbury line—far from it. It is clear that the Government intend to exercise the right, provided in the Bill, to make money available to the managers of lines—including this one, I suspect—so that they may put together a cosmetic buy-out.

Mrs. Gorman: Does the hon. Gentleman know that at least three organisations have expressed an interest in taking over this line, which I understand makes £60 million a year?

Mr. Mackinlay: The second part of the hon. Lady's news is breathtaking. If the line makes so much money, the commuters will ask where it is all going and why some of it is not being invested in the line to provide a modern system of transport from Southend, via Tilbury, into Fenchurch Street. Clearly that is not happening.
The hon. Lady alleges that three bodies are interested in taking over the line. It remains to be seen, but I expect that the interested parties will turn out to be of the James Sherwood variety—people interested in franchising lines provided that they can do so on their own terms. I shall be very surprised if anyone, other than managers, is prepared to take on this line. No one could fund it to the extent required by the commuters. It is a matter of simple arithmetic.
While I am thinking about Sir James Sherwood and others, I should say that there are people who are interested in privatisation of the railway network but make it abundantly clear that they are not interested in the Government's proposed methods. Only time will tell, but I believe that the hon. Lady will find—

Madam Deputy Speaker: Order. It is clear that the hon. Gentleman is wide of the ways and means resolution, the scope of which is fairly narrow.

Mr. Mackinlay: I accept your ruling, Madam Deputy Speaker. I succumbed to temptation following the hon. Lady's intervention.
Paragraph (c) of the ways and means resolution refers to penalties that may be imposed on franchisees who fail to comply with conditions or requirements imposed on them. It seems to me that, in terms of ensuring that franchisers fulfil their obligations, the Bill is fatally flawed, and the motion is inadequate. It is time the Minister told the House how he intends to guarantee the continuation of services when a franchiser fails. Monetary penalties will not get people home from a central London station if a company fails at 3 o'clock in the afternoon. The passengers will be stranded. There is no indication that


there will be any system of bonding, any guarantee that money will be available for continuation of the franchise should there be a failure.
The Bill contains explicit requirements regarding safety. It is clear from the Bill, as well as from replies to parliamentary questions that I have received, that there is no mechanism to ensure compliance with safety requirements in the event of a train failure or crash. It seems to me that the Government intend to reply on some cosmetic monetary penalty to give the impression that there will be sufficient sanctions to guarantee continued service and safety standards once a line is franchised or privatised. This is wholly inadequate. As several of my hon. Friends have said, there is great danger in this respect. Much more needs to be done. Monetary penalties will be wholly insufficient to guarantee safety and quality of service on the lines that are franchised.

The Minister for Public Transport (Mr. Roger Freeman): I shall be concise but clear in responding to what has been a brief debate.
The hon. Member for Newham, South (Mr. Spearing) raised a number of points. I assure him that, when Union Rail, with permission from the Secretary of State for Transport, goes out to consultation on the rail link, there will be thorough consultation with his local authority. If there is not, I am sure that the hon. Gentleman will let me know.
He asked about depots in Norfolk where there are more than two or three franchisees. That seems most unlikely, but as my right hon. Friend said when moving the Second Reading, he will publish a map in due course showing the nature of the franchises throughout Great Britain, and I am sure that any problems will then be identified.

Mr. Spearing: It was an example.

Mr. Freeman: The hon. Gentleman says from a sedentary position that he was giving an example. That is why I have answered in general terms. The map will show where the franchises overlap.
The hon. Member for Newham, South next asked about franchisees paying money back under the resolution. That is the way in which, on profitable lines, the state will receive money on an annual basis for running a franchise, and the hon. Member for Kingston upon Hull, East (Mr. Prescott) referred to the east coast main line. That will, in essence, enable the public sector to cross-subsidise, for example, InterCity lines that lose money.
I was then asked about the industrywide conciliation and training service. The Health and Safety Commission report on safety recognised the importance of staff qualifications and training. It recommended high level core standards set on an industrywide basis, possibly by the Railway Training Council.
The hon. Member for Newham, South went on to speak about what he called a danger of wage-cutting. I think that the reverse is true, that we will see greater wage flexibility and the introduction of performance and bonus pay. I would expect to see an industry with better trained and better paid staff.
My hon. Friend the Member for Billericay (Mrs. Gorman) was out of order for part of her remarks, but in respect of the beginning of her comments that were in order, the re-signalling contract has been signed and is going ahead. We would welcome the bus companies bidding for franchises. If there is concern about anti-competitive legislation, we invite the bus companies to talk to the Director General of Fair Trading.
The right hon. Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Member for Bradford, South (Mr. Cryer) referred to preservation railways. I was fascinated to read of the authorship by the hon. Member for Bradford, South of a document entitled "Steam in the Worth Valley," volume 1 of which he wrote in 1969 and volume 2 in 1972. We now know where his sympathies and interests lie, and I am delighted to learn it.
I have a simple answer to the points that were made at considerable length, although I appreciate the need to express them in that way. The Secretary of State intends to exempt preservation railways from the licensing system under the provisions of clause 7. That is a clear assurance.
In relation to franchising, the right hon. Member for Berwick-upon-Tweed asked about penalties for failure, and the hon. Member for Thurrock (Mr. Mackinlay) raised essentially the same point. If a railway train run by a franchisee fails in the technical sense, Railtrack is responsible. That is the safety authority, and it will ensure that the train is removed from the station or tracks.

Mr. Mackinlay: How?

Mr. Freeman: Because Railtrack will have the necessary equipment. Obviously, as the safety authority, it will have to do that. If a franchisee loses financial standing and credibility, the franchising director shall step in and ensure that service continues. If the franchisee fails to meet the performance standards, financial penalties will be incurred and there may be receipts by the franchising director.
My hon. Friend the Member for Stafford (Mr. Cash) asked about the European Transport Commissioner and an alleged threat not to support with European money the privatised system. We are not aware of such a threat, but in any case, Railtrack, which will be the consumer of large amounts of public sector money, will still qualify to receive money from the European investment bank and from other Commission sources.
We are determined to ensure that this country receives its fair allocation of funds that are contributed by the taxpayers of this country, and I commend the resolution to the House.

Question put and agreed to.

Resolved,

That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise—

(a) the inclusion in licences granted under the Act of conditions requiring the rendering of payments to the Secretary of State or the Rail Regulator;
(b) the inclusion in franchise agreements, within the meaning of the Act, of conditions requiring the rendering of payments to the Director of Passenger Rail Franchising;
(c) the inclusion of provisions under the monetary penalties may be imposed on persons who contravene or fail to comply with conditions or requirements imposed by or under the Act;


(d) the imposition of charges to corporation tax by provisions relating to the taxation of persons who are transferors or transferees in relation to transfer schemes under the Act;
(e) the payment of sums into the Consolidated Fund or the National Loans Fund.

Orders of the Day — Customs and Excise

Mr. Andrew F. Bennett: On a point of order, Madam Deputy Speaker. May I draw your attention to the fact that, after motion No. 5 on the Order Paper, we read that the Select Committee on Statutory Instruments has not considered the instrument. Since that was printed, it has considered it, but I suggest to you that one of the duties of the Chair is to protect the rights of Back Benchers. It is an unsatisfactory state of affairs if that Select Committee produces a report—and I understand that there are copies on the Table and in the Vote Office—indicating that there is a defect in the drafting of the order if Members do not have a reasonable amount of time to look at it.
I ask you at least to consider drawing to the Government's attention the fact that it is not satisfactory for them to table an order like this until the Statutory Instruments Committee has had an opportunity to consider it and to make a report to the House on which hon. Members can form an opinion so that there may be an informed debate. You will be aware that the Select Committee receives a large number of orders during a year and the whole purpose of the Committee considering them is to produce reports and to inform the House. I hope that you will rule that it is not satisfactory that the Committee should consider a matter like this at half-past four in the afternoon, with the House considering it late the same evening.

Madam Deputy Speaker (Dame Janet Fookes): The ordering of business is not strictly a matter for the Chair, but the hon. Member has made his point and no doubt it will have been heard by those on the Government Front Bench.

The Paymaster General (Sir John Cope): I beg to move,
That the Customs and Excise Duties (Personal Reliefs for Goods Permanently Imported) Order 1992 (S.I., 1992, No. 3193), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Madam Deputy Speaker: I understand that with this it will be convenient to discuss at the same time the following motion:
That the Customs Duty (Personal Reliefs) (Amendment) Order 1992 (S.I., 1992, No. 3192), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Sir John Cope: I shall come in a minute to the point of order raised by the hon. Member for Denton and Reddish (Mr. Bennett).
These two orders concern personal reliefs for people coming into this country. They are both made necessary by the start of the European single market and both have the effect of continuing the reliefs which concern travellers from outside the European Community. They both replace orders which previously applied to all countries, including the Community. However, under the single market, we do not need reliefs on the same basis because travel within the EC is covered by other regulations.
The two orders basically continue the old reliefs for travellers from outside the Community. The first, No. 3193, primarily continues relief on the personal belongings of people who come to live here. The second order, No.


3192, provides for continuation of the familiar duty-free and duty-paid allowances for those arriving from outside the EC. As we have discussed on other occasions, travellers from within the Community now have different rules under different legislation, but for those arriving from outside the European Community the allowance for other goods has also been increased by this order to £36—not a large increase, but nevertheless a small improvement.
As the Member for Denton and Reddish mentioned on a point of order, the Select Committee has put before the House today a report drawing the attention of the House to the instrument, because there is an argument as to whether the drafting is correct. It is all to do with the definition of "third country", as hon. Members will have seen from the note on the Table. The Customs and Excise says, as is clear from a memorandum which it submitted on the point, that it considers that the legal effect of the present order is clear. Evidently there is room for argument.
It is an extremely abstruse point of parliamentary drafting, but I am advised that it is clear. We will try to persuade the lawyers on both sides of the argument to reach agreement, and, if it is necessary to do so, I shall bring a further order before the House to amend the existing provision.

Mr. Andrew Smith: I shall not detain the House long, but I should like to echo the point raised by my hon. Friend the member for Denton and Reddish (Mr. Bennett). It is clearly important that the drafting of the orders is right and we are indebted to the Select Committee on Statutory Instruments for drawing the error to our attention. I take the Paymaster General's assurance that the matter will be put right.
As I understand the orders and what the right hon. Gentleman said, they amend the personal reliefs from customs duty to remove from relief those goods purchased by travellers from other European Community member states who will now be catered for in another order, but leave in place the previous allowances for travellers arriving from outside the Community.
The orders are part of the general change that we welcome, opening up opportunities for members of the public to derive some personal benefit and enjoyment from the operation of the single market. For many millions of our citizens, such changes do more in an immediate sense to give meaning to the European Community and the freedom of movements of people and goods than many of the economically and constitutionally grander principles and declarations of the Maastricht treaty.
The second order, which applies to permanently imported goods, has the same effect on people importing belongings when moving house, honorary decorations, awards, goodwill gifts, inherited goods and certain goods ancillary to specified visiting forces. It also reflects the commendable achievement of the Community in making it as easy as possible for people to move home from one Community member state to another, thereby rendering the old reliefs redundant except for those moving to the United Kingdom from beyond the European Community.
We welcome the orders, but I wish briefly to press the Paymaster General on the staffing consequences for Customs and Excise services, which we touched on briefly in last week's Maastricht debate on the harmonisation of indirect taxation.
It is generally accepted that the creation of open border crossings for EC citizens and the fact that excise goods will no longer be taxed at the frontier enormously increases the scope for smuggling. I am talking not about cross-border shopping, which the Paymaster General has already estimated could cost £250 million per year, but about smuggling for resale on the black market. Given the relatively high excise duties on some items in the United Kingdom, the potential financial gains to smugglers are enormous. For example, I have heard that one container shipment of Spanish cigarettes alone could net £30,000 or more in profit.
In regard to the numbers of excise staff, I understand that the board's management plan for 1991 made an allocation of an additional 248 staff for the extra inland work arising from the single market, but following the 1991 autumn statement, this was reduced to 178 staff. That is not many staff, given the potential scale of the problem and the shift to inland scrutiny that the single market necessarily involves. There must be literally hundreds of thousands of potential outlets for smuggled goods.
Secondly, the small increase in staff for inland scrutiny must be set against an overall reduction in staff in the service. I understand that the projected outturn for Customs and Excise staff for the current financial year is 27,800 staff years, of which 2,200 are on excise work, as compared with 28,400 for 1991–92 in the board of management report, of which 2,300 were on excise work. Notwithstanding the allocation of 178 staff to which I referred, the excise department has fewer staff to undertake what is undoubtedly a far more difficult job. The same arguments apply to customs staff, for whom the 1992–93 projected outturn is 9,900 staff, compared with 11,000 for 1991–92.
Those are serious issues and I want a clear assurance from the Paymaster General that they will be kept under the closest review, that staff numbers and the extent of smuggling will be carefully monitored, and that, if it becomes apparent that additional staff are needed, the Government will not hesitate to appoint them, for the public would have it no other way.

Mr. Michael Stern: I have three brief comments to make on order No. 3193. In view of the lateness of the hour, I shall be happy if my right hon. Friend the Paymaster General wishes to write to me about them, rather than attempting to answer me now.
First, paragraph 13 contains two references to a person becoming "normally resident" in this country. My right hon. Friend will be aware that there are a number of slightly differing definitions within the tax Acts of what is normal or ordinary residence. It would have been helpful if the appropriate statutory reference had been given in the order to show which definition is to apply, or whether the definition which will apply is to be included in the Government's domicile Act, when that appears.
Secondly, I am slightly worried about the reference in paragraphs 13 and 15 to the registration of property brought in and given relief in the order, which is wholly


laudable. A favourite way to explain undeclared income used to be to suggest that it arose, in the case of someone coming to this country to marry, from property brought in before the marriage. I notice that under the order such property would have to be declared. I want an assurance from my right hon. Friend that, under the parallel order—under the single market—there will be some way to check on what might otherwise be a false claim to explain otherwise unexplainable income.
Thirdly, paragraph 16 of order No. 3193 deals with relief for scholastic equipment. I notice that students coming into this country are entitled to bring with them normal scholastic equipment,
including calculators or typewriters.
There is no relief for computers, although some students might be coming here to attend a course requiring their use. It would seem odd if they had to pay duty on second-hand computers with no great value when they do not have to pay duty if they bring in a separate calculator and typewriter. I should be grateful for reassurance from my right hon. Friend on that.

Mr. A. J. Beith: A fair amount of confusion will flow in the public mind from the orders. That is no fault of the Minister's, but he must be aware that he may have to take some steps to deal with it. Some of the confusion probably arises because, with all the publicity about the new arrangements for moving duty-free goods across frontiers within the Community, people have got used to the idea that they can buy large quantities of alcohol and other goods and have nothing to pay, so long as they are importing it for their own use.
However, people coming from outside the Community—as many people returning from holiday will be—are still subject to stringent restrictions. For example, even with the revalorisation, the allowance amounts to only £36 in respect of gifts. Officers at the ports will have quite a difficult time, at least initially, explaining to people coming from non-Community countries that they have grossly overestimated what they are allowed to bring in.
There will also be a problem at some of the ports which have both Community and non-Community traffic. Take a port such as North Shields or Harwich, where the morning boat will come from Denmark and the evening boat from Sweden. I am not quite sure how Customs and Excise will manage the now very different requirements for staff in that situation, because the morning boat from Denmark will require only the sort of overview that customs officers will now take of people coming from a Community country, whereas the boat from Sweden will require the full application of all the provisions to which these orders refer, with the very strict limits that they include.
Since one of the consequences of the changes has been a considerable transfer of staff to landward duties—with some argument about whether enough staff are available for those very different duties—I wonder how Customs and Excise will manage this very different pattern of operation at the ports, where some vessels will come from Community countries and some not.
Something else that people may not realise but which is underlined by the orders is the extraordinary range of exemptions and mystifying allowances which exist, like the allowance of up to £800 for a wedding present, or the fact that someone coming back as an official visitor—I am not

sure how far that category extends beyond Ministers to other office-holders—can bring back without paying duty a gift from some oil sheikh who has very kindly bestowed it on him, as well as the scholastic items mentioned by the hon. Member for Bristol, North-West (Mr. Stern).
A wide and mysterious range of exemptions already exists in our legislation and presumably will now be carried over into the new system, but I envisage considerable confusion. Confusion at the port of entry, when it gives rise to arguments with customs officers, can lead to frayed tempers in rather unhappy circumstances, not to mention considerable queues building up behind as other people wait to go through customs. I hope very much, therefore, that the Minister has these problems in mind.

Mr. Andrew F. Bennett: I raised on a point of order the question of the report from the Select Committee on Statutory Instruments, and the Minister conceded, perhaps a little grudgingly, that he was prepared to meet the point that the Committee had raised; but he did not refer to the problem of the House having to scrutinise the order tonight, having only just had the report from Committee put before it. I accept that it is a very minor report, but I am concerned about the principle. It seems to me totally wrong that the Government should put an order down before scutiny by a Select Committee has taken place and before the Government can anticipate whether it will be an important or a minor report.
I simply ask the Minister to look at this problem. Repeatedly, the Chairman of the Committee, my hon. Friend the Member for Bradford, South (Mr. Cryer), other members of the Committee and I have argued that we should have the same Standing Orders in the House as in another place and that the Government should not be able even to put the order down until scrutiny by a Select Committee or a Joint Committee has taken place. If the Government are not prepared to accept that as a new Standing Order, however, it is incumbent on Ministers to try to ensure that instruments are brought forward by their Departments in a way which helps rather than hinders scrutiny by the House.
It is very odd that this set of orders came forward on, I think, 17 December, which makes it most difficult for the House to carry out its scrutiny. It seems to me that it was all done for the convenience of people in the Department, to get the order laid before Christmas, with no thought for the possibility of scrutiny by the House. I hope that the Minister will say that, in future, his Department at least will try to make sure that orders are not put down for debate in the House until scrutiny by a Select Committee has been completed.

Sir John Cope: As the hon. Member for Denton and Reddish (Mr. Bennett) said, the order was laid on 17 December. We would like to have laid it before the House earlier, but as he will probably know, negotiations on the single market continued until late last year, into December. That meant that we were unable to lay the order as early as we would wish. However, as soon as we could, we laid all the orders and others involving the single market, as we were anxious for them to be known about and in operation as soon as possible—on 1 January where possible.
The issue that gave rise to the worries of the Joint Committee on Statutory Instruments is—as I said, and as the hon. Member for Denton and Reddish acknowledged—a small and highly technical point on legislative drafting, about which there is room for disagreement. Had it been a significant issue that went to the heart of the order, I would have hesitated to lay it before the House until the matter had been cleared up. However, I thought that it was a highly technical issue. If it turns out to be necessary for us to correct it, we shall do so. Obviously, I hope that it is not—it is an abstruse point.
The right hon. Member for Berwick-upon-Tweed (Mr. Beith) spoke of the possibilities of confusion under the new arrangements. Any such major change is likely to cause problems for the public, and we have also had to carry out training for the customs officials and others to ensure that the new arrangements are understood. It will take some time for the public to take them on board.
We have produced and, I think, sent to hon. Members, a small guide for travellers that has been widely distributed on aircraft and by travel agents. It assists people with the changes. It is intended for the ordinary reader and does not go into nearly as much detail as the order on matters such as what one can bring to the UK after marriage, which is not necessary in such a leaflet. If the right hon. Gentleman or anyone else finds the categories listed in the order mystifying, I can assure them that, I think without exception, they are the same as before. They are almost identical to the previous categories. Most of us do not have cause to use the provisions at any time in our lives, let alone regularly, and I do not think that the measures will cause too much difficulty.
The right hon. Gentleman and the hon. Member for Oxford, East (Mr. Smith) drew attention to the staffing considerations that will arise. The remarks of the hon. Member for Oxford, East went much further than the review, and I cannot confirm his figures off the cuff. Clearly, considerable differences have been required in the deployment of staff by customs. I can readily undertake to keep matters under the closest review, particularly in the early stages of the single market— indeed, we are already doing so. As I have told the House before, we are determined to ensure that smuggling, bootlegging and the resale of goods brought back without UK duty having been paid are pursued with the utmost vigour of the law by all the customs officers that it requires.

Mr. Andrew Smith: I welcome the right hon. Gentleman's commitment. Will he add to that an assurance that he will appoint additional customs and/or excise staff should it appear necessary in the light of that monitoring?

Sir John Cope: Yes. The customs and the Government must determine how we define necessary, but we shall keep the position under review and see what we determine to be necessary in order to police such matters firmly. It is extremely important, particularly in the early stages, that we do our best to counter the opportunities for smuggling that might occur.
My hon. Friend the Member for Bristol, North-West (Mr. Stern) raised three points, starting with the definition of "normally resident" for the purposes of the order. He will find that paragraph 3 of the statutory instrument, No. 3193, to which he referred, sets out the rules for determining where a person is normally resident. They are not precisely the same as some in other parts of the taxing statutes, but those are the ones that apply in this case.
My hon. Friend also asked about the bringing into this country of property on marriage by people coming from other countries within the EC. The order deals with people coming from outside the Community. People coming from within the Community can bring with them, not only on marriage but at any other time, any property on which the normal duty has been paid within the country from which it is brought.

Mr. Stern: The point that I was making concerned not so much the ability to bring in property as the laudable provision in the order that property should be declared on being brought in. There is some concern that within the EC no such declaration will be required.

Sir John Cope: That is true. As far as I am aware, no such declaration will be required, because we are in the process of getting rid of the fiscal frontiers, so that people can travel as freely as possible from one part of the EC to another.
My hon. Friend also asked about instruments usually used by students, particularly computers. If he looks, he will find that that part of the order refers to instruments normally used by students, including calculators and typewriters, but it does not exclude computers. If a computer is regarded as the sort usually used by a student, I believe that it will be covered, but I shall check that. If necessary, on that or on the other technical points that my hon. Friend raised, I shall write to him. He kindly gave me the opportunity to do so, but I hope that I have given him sufficient answers on the points.

Question put and agreed to.

Resolved,

That the Customs and Excise Duties (Personal Reliefs for Goods Permanently Imported) Order 1992 (S.I., 1992, No. 393), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Resolved,

That the Customs Duty (Personal Reliefs) (Amendment) Order 1992 (S.I., 1992, No. 3192), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Orders of the Day — Value Added Tax

The Paymaster General (Sir John Cope): I beg to move,
That the Value Added Tax (Flat-rate Scheme for Farmers) (Designated Activities) Order 1992 (S.I., 1992, No. 3220), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): I understand that with this it will be convenient to discuss at the same time the following motions:
That the Value Added Tax (Flat-rate Scheme for Farmers) (Percentage Addition) Order 1992 (S.I., 1992, No. 3221), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.
That the Value Added Tax (Input Tax) Order 1992 (S.I., 1992, No. 3222), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.
That the Value Added Tax (International Services and Transport) Order 1992 (S.I., 1992, No. 3223), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Sir John Cope: The first two orders, No. 3220 and No. 3221, concern the flat rate scheme for farmers introduced in the Finance Act 1992. The first order specifies the agricultural activities that the scheme covers and the second order fixes the flat rate percentage at 4 per cent.
The House will have seen that the agricultural activities covered are wide-ranging and that the percentage is in the range that we forecast last summer and is calculated to compensate farmers overall for the VAT that they have spent on business purposes.
The third order, No. 3222, makes arrangements to continue into the single market the tax arrangements for blocking input tax deduction on business entertainment and motor cars and second-hand goods which are taxed only on the gross profit margin.
The order makes no substantive change in the arrangements. It may appear rather complex, because the opportunity has been taken to consolidate a series of existing orders, as well as making the changes necessary for the single market.
The last order, No. 3223, is about services, including transport. For exports to and imports from countries outside the European Community, there is no change—no VAT will be chargeable in such cases. For other services, there will be no charge to tax where, in future, the system provides for treating them outside the scope of United Kingdom VAT.
Input tax will still, subject to the usual rules, be recoverable if supplies would have been taxable if made wholly in the United Kingdom. If they would have been exempt, another order that is not before us—the Value Added Tax (Input Tax) (Special Provisions) Order 1992—provides for the recovery of input tax. Again, it is a slightly complex order but, without making major changes, it will help to implement the single European market.

Mr. Andrew Smith: The orders are Fairly unobjectionable, but I have a few observations and questions. On the value added tax flat rate scheme for farmers, the Paymaster-General will be aware that we did not oppose the insertion of the scheme into last year's Finance Bill, and we acknowledge that its introduction as

an option will be welcomed by those concerned with farming and related activities, who may derive some potential benefit from its provisions.
The scheme is optional, and some farmers on the margin may get a headache calculating whether or not to join it, but at least they can choose what best suits them, given the nature of their business and customers, and the volume of paperwork in which they want to become involved.
The flat rate addition has been set at 4 per cent., which is at the lower end of the 3 to 6 per cent. band that the right hon. Gentleman indicated in our deliberations on last year's Finance Bill. The method of calculating that 4 per cent. and its selection remains something of a mystery. When the Paymaster-General replies, perhaps he can explain the basis of that calculation and reveal the outcome of his discussions with the European Commission.
The House should be told the Government's estimate of the scheme's costs to the Exchequer. I know that will depend in large part of the level of take-up, but it would be useful to know the assumptions used by Customs and Excise. It would be interesting to know also how many farmers have registered under the scheme so far and their response to it.
Can the Paymaster-General assure us that data relating to the scheme's operation will be comprehensively maintained, so that in future it will be known how many farmers fall within how many bands, in terms of the total amount they have levied under the scheme over the year? That will be especially relevant when the scheme is reviewed.
I should be grateful if the right hon. Gentleman will say how often the scheme and the rate will be reviewed. Article 25(3) of the sixth VAT directive states:
Member States shall fix the flat-rate compensation percentages, where necessary, and shall notify the Commission further before applying them. Such percentages shall be based on macro-economic statistics for flat-rate farmers alone for the preceding three years.
Will the Government apply that by reviewing the percentage every year, with a rolling three years' macro-economic statistics, or by reviewing the rate every three years or some other interval? I shall be interested to know the Government's decision, as will flat rate farmers involved in the scheme.
My next point relates to the bloodstock industry. When the Minister of State, Treasury announced the introduction of such a scheme in October 1991, she explained that one of the Government's intentions was to help to put United Kingdom horse breeders on a more equal footing with the rest of the European industry. Since then, in correspondence with me, the Paymaster General has again pointed to the flat rate scheme as one of the measures taken by the Government to assist the bloodstock industry.
Yet it is clear from reaction in the industry, and in particular from the decision by Tattersalls to transfer this year's Houghton yearling sales to Fairyhouse in Ireland, that the introduction of the scheme as such falls far short of the industry's needs. In last week's debate on indirect taxation in relation to the European Communities (Amendment) Bill, I referred to what Tattersalls had said in a new release on 24 November last year:
Additionally in the last few days an unexpected change has emerged from discussions with Customs and Excise. Previously we had been assured by HM Government that all


horses coming to Newmarket from Ireland and France and being sold by UK Flat Rate Farmers would be sold free of all
UK VAT"—
as Tattersalls had stated in a previous press release.
Customs have now changed their previous interpretation so that all Yearlings, previously purchased with Irish or French VAT charged in either of these two countries, would have to be sold by Flat Rate Farmers with VAT in Newmarket or VAT would have to be charged on entry into the United Kingdom.
In his otherwise fairly comprehensive reply last week, the Paymaster General did not touch on that point. Will he tell us tonight whether Tattersalls was given the assurance that I have just quoted—that all horses from Ireland and France being sold by United Kingdom flat rate farmers would be sold free of all United Kingdom VAT—and whether Customs and Excise has changed that interpretation, so that even yearlings on which Irish or French VAT had previously been charged would have to be sold by flat rate farmers with a United Kingdom VAT charge, either at Newmarket or on entering the country? I hope that the right hon. Gentleman can make the position clear, because it seems that the flat rate scheme cannot meet the concerns expressed by the industry.
As I understand it, horses brought to the United Kingdom for sale which have previously been purchased in other member states, subject to VAT in those states—either by way of normal sale, or following dispatch, acquisition or distance selling arrangements—would be treated as acquisitions in the United Kingdom, and the flat rate farmer would be required to register for VAT in the United Kingdom once his acquisitions exceeded £36,000 in any one period of 12 months. Accordingly, virtually all the breeders at the important Houghton sale would not find it viable to sell as flat rate farmers.
Another supposed potential benefit of the scheme was the option for United Kingdom vendors to deregister for VAT, and to become flat rate farmers themselves. That, too, is unlikely to prove an attractive proposition for bloodstock businesses: if they became flat rate farmers, they would lose the ability to recover input VAT on their expenses, and would have to finance an additional overhead. They would be better off staying registered, continuing to reclaim their input VAT and selling in Ireland or France, at the price of sending their horses to the sale rather than selling them here.
I appreciate that discussions with the industry are continuing, not least about the important question of allowing owners to register for VAT; but I wish to emphasise that there is more than a little urgency in the present position. People in the industry, and those whose livelihood depends on it, are understandably concerned. I should be grateful if the Paymaster General would tell us when he expects to present new proposals.
I understand that the practical effect of the Value Added Tax (Input Tax) Order 1992 is essentially to change the application of the exclusions of input tax from being reclaimed on the goods listed by the Paymaster General at the point of importation to being reclaimed at the point of acquisition in the case of goods from other member states. I should be grateful if the Paymaster General could confirm that my understanding is correct and that no significant change is being made which does not result directly from the operation of the single market.
I understand that the changes made under the Value Added Tax (International Services and Transport) Order 1992, cover transport and associated services and result essentially from the application of the place of supply rules under the sixth VAT directive, so that activities are counted for tax purposes as happening, as far as possible, in the state or place where they in fact occur.
However, there is a complication, in that, where the customer of a transport or ancillary service is registered for VAT in the same member state as the transport provider, VAT is charged and deducted under normal procedures, but where the customer is not registered in the same member state, VAT is not charged but is treated as reverse supply on the customer's VAT return, so that it appears there as both input and output tax. What is more, if the transport provider serves a customer who is not registered for VAT, he must charge and account for the VAT in the member state from which the goods departed.
That may or may not be more straightforward in practice than it sounds in theory, but it seems bureaucratic nonsense in what is supposed to be a simpler VAT regime for trade within the single market to have essentially two systems of VAT operating alongside each other.
There is particular room for confusion where the destination of cargoes is switched en route or where the customer for part of the consignment is registered for VAT in the same member state as the carrier and the customer for the rest of the consignment is not. I should be grateful for the Paymaster General's comments. Would it not have been simpler to stick to a zero-rating system, at least for as long as the present transitional destination system for VAT lasts, as I envisage complications arising from the operation by business of the terms of that order?
We do not oppose the orders, but it is important that the House receives answers to the questions that I have asked.

Mr. James Paice: I shall not detain the House for long, but I want to take up the points raised by the hon. Member for Oxford, East (Mr. Smith) about the bloodstock industry, which, as the House may know, is very dear to my heart.
The hon. Gentleman is right to say that the flat rate scheme was heralded as the salvation of the bloodstock industry, given the widely varying rates of value added tax which would face the industry after the advent of the single market. In fact, they existed before then, but their significance was greatly enhanced by the introduction of the single market at the beginning of January.
The flat rate scheme will not work, partly because of the confusion over the status of horses sent in from Ireland and France, as the hon. Gentleman outlined. It also will not work because the fundamental requirement of getting back one's input tax is that one charges the 4 per cent. flat rate—the rate that has now been decided—to the purchaser of one's horse, if he or she is registered for VAT. Of course, we know that the vast majority of purchasers are not registered for VAT. Putting one's horse into the auction ring at Tattersalls is quite a lottery—one does not know whether the successful bidder will be registered. Therefore, the scheme was not the salvation for which we had wished.
Registration is now the most important issue facing the Government. I realise that the hon. Gentleman might not


have caught up with the written answer given today by my right hon. Friend the Chancellor to a question tabled by the right hon. Member for Manchester, Wythenshawe (Mr. Morris). The question dealt with registration. The answer stated:
Customs and Excise has drawn up a technical memorandum of understanding to be agreed with the industry as soon as possible.
I welcome that step forward. It moves forward my proposition that racehorse owners should be able to register for VAT. I raised that proposition on 19 October when I initiated an Adjournment debate on the subject. I still believe that there is no reason why all racehorse owners should not be able to register under the sixth VAT directive. I know that the Government are not prepared to accept that position.
We must remember that we are trying to get round the problem of the differentials in VAT. The solution which we come up with must nullify that effect. As today's written answer suggests, it is clear that a solution which helps only some owners—we do not know the definition or proportion of "some"—is unlikely to solve the overall problem. Unless the vast majority of owners are able to go to Tattersalls and buy a horse without being concerned about the implications of VAT, they will not buy. If they do not buy, Tattersalls will have its principal sales at Fairyhouse and vendors will want to sell in Fairyhouse or at Deauville in France.
We must have a system of registration which deals with the vast majority of racehorse owners. I should like a system which covers all racehorse owners. The fundamental problem is that we need a system which is designed to help the industry and which is not so hedged with restrictions and criteria for registration that it rules out the vast majority. I fear that we may find that that is the case under the memorandum. I have not yet seen the memorandum, so I cannot comment in detail on it.
Our system contrasts with the position in Europe. France has a system of restriction on registration, but the effect of it is that almost all owners can register. The restriction may be couched in words which are a double entendre, but the vast majority can register. I hope that my right hon. Friend will address those points.
We must ensure that the blodstock industry, which is pre-eminent in the United Kingdom, can compete with the rest of Europe, continue to have a sound basis in its stud farms and sell its stock at Newmarket and Doncaster. If the industry starts to consign abroad, the studs will soon follow. We know that that is beginning to happen, and the trend will accelerate dramatically.
The VAT order is the first bite at the cherry. The flat rate scheme is the first bite which the Government took. My right hon. Friend's initiative of distance selling—great credit must go to him for it—was the second bite at the cherry, and registration was the third bite. We cannot expect a fourth bite. We must get it right this time. The two earlier bites failed to solve the problem. I hope that we will succeed this time.
We should avoid a bureaucratic approach that so constrains registration that the vast majority are ineligible or feel that it is simply impossible to register because of bureaucratic nonsense. I hope that my right hon. Friend will ensure that the technical memorandum of understanding which is referred to in the written answer given only this afternoon provides ample opportunity for almost all racehorse owners in the United Kingdom to register for

VAT. If it does not happen that way, the memorandum will not have the effect that we all want, which is to offset the differential that so besets our industry.
I am grateful that a few of my hon. Friends have come into the House after seeing my name on the screen. I am surprised that most of them did not go home. It demonstrates the significant concern on both sides of the House about this vital issue.

Mr. Paul Tyler: I am grateful for the opportunity to speak briefly in this important debate.
The Paymaster General will recall that my colleagues and I warmly welcomed the introduction of the flat rate scheme for farmers. We continue to do so, not just because we believe that it may be helpful in particular cases. In that respect, I endorse wholeheartedly the comments made by the hon. Member for Cambridgeshire, South-East (Mr. Paice), whom we should really call the hon. Member for Newmarket. Hon. Members on both sides of the House are concerned about the bloodstock industry, and we hope that the Paymaster General will find a way to meet the proper anxieties that have been expressed.
The flat rate scheme was introduced partly because the industry felt that it could be helped significantly by the removal of the piles of paper that seem inevitably to be generated by the normal VAT scheme. The scheme was introduced to try to educe the bureaucracy.
I know that the industry has been widely consulted and is very enthusiastic about the scheme, but I want to express one or two misgivings about the way in which it has been presented to us. We know that schemes are available to farmers in all the member countries of the Community except Denmark, so we are taking a step forward in terms of harmonisation. It is, however, important to learn the lessons of the other member states. The critical issue with any exemption is to ensure that it is so easy to claim that there is an effective take-up. Without an effective take-up, there is not much point in trying to produce a scheme in the first place.
That brings me to the critical question of the selection of 4 per cent. As the Paymaster General will recall, there was much discussion, in the House and outside it, about that figure. During our debates in the Committee that considered the Finance Bill, it was suggested that the figure would be in the band 3 per cent. to 6 per cent. Clearly it is within that band. It is important, however, that the Paymaster General should tell us where that precise figure has come from. Has it been plucked out of the air? Is it a firm figure on the basis of which we can be clear that enough farmers will take up the scheme to make it really worthwhile and of real help?
It is by no means certain at this stage that there will be an effective take-up. The National Farmers Union and other organisations in the industry have no notion whether 4 per cent. is the figure at which the measure should be pitched, and so far there is nothing to suggest that the Government have undertaken a survey to establish whether there will be an effective take-up.
How will the scheme be reviewed? What mechanism will be used to monitor take-up and to try to ensure that, over the years of its operation, the scheme operates at optimum level so that we effectively produce for the farming industry a real concession with real take-up and real impact?
I am sure that the Paymaster General will be able to answer those questions and satisfy me on those points. In the meantime, I know that the agricultural community will welcome the scheme.

Mr. Geoffrey Clifton-Brown: My first question relates to statutory instrument No. 3220—the designated activities order. Can my right hon. Friend the Paymaster General confirm what he said in his reply to me regarding my constituent, Mrs. Anne Jenks—that the flat rate scheme will apply to stud farming? Paragraph 1 of part I of the schedule refers to "General agriculture, including viticulture." Can my hon. Friend confirm that that description and the reference to "general stock farming" in part II of the schedule include stud farming, as he told me in his letter about my constituent?
I echo the words of my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice). Although in principle the scheme is welcome to one or two very small horse owners, it is so limited in scope that it is totally inadequate. It seems to me absolutely crazy that horse owners can send their horses over to the Republic of Ireland or France, sell them and bring them back again and so avoid paying VAT. The southern Irish and French Governments help their industries to a considerable extent by having a rate of VAT significantly lower than ours.
I am sure that it is not beyond the wit of my right hon. Friend's civil servants to find a way round this problem so that this industry, which has been pre-eminent here since the 17th century, may retain its position. Otherwise, the studs and the rest of the business will simply go to southern Ireland and France. I cannot see in European law any reason why owners should not be allowed to register for VAT in the same way as any other trade and thereby be enabled to reclaim all the input taxes. Of course, output taxes would also have to be taken into account.
I urge the Paymaster General to consider these points carefully. Otherwise, this industry will just disintegrate, to the country's great detriment.

Sir John Cope: I should like to deal first with what the hon. Member for Oxford, East (Mr. Smith) said about matters unrelated to the flat rate farming scheme. The hon. Gentleman asked whether I could confirm that there is no change that does not arise from the single market. I can. Indeed, I believe that in my opening remarks I said something along those lines.
On the question of transport—services and so on—everything is related to the place-of-supply rules. The matter is very complicated, and, while I hesitate, after a single hearing, to confirm the hon. Gentleman's summary. I can say that it sounded broadly correct.
The hon. Gentleman drew attention to the difficulty arising from individual countries having different VAT schemes and from travel between countries. As he said, it would be simpler if every member state were prepared to zero-rate all transport and other related services. However, we come back to the question whether it is desirable to have identical VAT systems in all countries. No doubt that idea appeals to the tidy-minded, but this country and the

other countries in the Community have expressed the view that the finance Minister of each state should enjoy flexibility. Matters are, of course, discussed, and there are many agreements. Indeed, these orders take account of harmonisation agreements. Nevertheless, we retain the right to flexibility. While that leads to some complications, it is right in principle.
Most hon. Members have referred to the flat rate scheme for farmers and to related matters—in particular, registration in the context of horses, especially racehorses. I was asked how the 4 per cent. had been arrived at. The VAT-carrying goods and services purchased by farmers have been examined, and it is estimated that the figure that has come out will give back to the farmers who choose to become flat rate payers the VAT that they spent on business purchases—what, in ordinary circumstances, would be the input tax. As this is a brand-new scheme, we have had to do much estimating.
I was asked when the rate of 4 per cent. would be reviewed. It should not be necessary to review it annually. As the hon. Member for Oxford, East said, when we are in a position to do so we shall have to consider how the scheme has worked out over a period of three years and whether it is working in the way I set out. I hope that we shall not need to alter it frequently, though we shall have to monitor the scheme in the early years. The figure will not rise and fall with inflation, and it is dependent on the working of the parameters over the years. I hope that 4 per cent. will prove to be a stable figure.
Not many farmers have so far registered for the scheme. As hon. Members have pointed out, it is desirable that registration should be optional. Indeed, that is an important feature of the scheme.

Mr. Andrew Smith: How many is "not many"?

Sir John Cope: I cannot give the figure offhand. I will find out. It has not been very high so far.
It has been suggested that I thought, or some people thought, that the flat rate scheme was, by itself, the solution to the problems of VAT and the horse racing industry. I cannot recall claiming that or others making such a claim. When the present Secretary of State for Employment was doing my job, there was not much enthusiasm for the scheme. By the time I took over, a certain amount of enthusiasm for it had built up.
It was not announced in the Budget, but it was introduced in the Finance Bill last year at the request of people involved in the horseracing industry, particularly on the sales side. I recall pointing out at the time that part of the exercise was to reassure Irish flat rate farmers—breeders and so on—who seemed remarkably reluctant to register for VAT in the conventional manner, that they could make use of such a scheme if they came here.

Mr. Andrew Smith: The Minister said that the scheme was introduced at the request of the bloodstock industry. I have with me a letter from Tattersalls, which says of the scheme:
It has to be stressed, first of all, that contrary to certain statements that have been made, the flat rate farming scheme was not introduced at the request of the industry. The industry in fact turned the scheme down in January 1992 when offered it by the then Minister of State, Mrs. Gillian Shephard.

Sir John Cope: I said that. I was requested to introduce it, which is why it was brought in at a later stage. I do not


want to get into a wrangle with Tattersalls or anybody else over the matter. I am aware of the press release from which the hon. Gentleman quoted and in which Customs was accused, in my view wrongly, of having changed its interpretation of the scheme. There were some misunderstandings at that stage, and I do not want to exacerbate them.
I say that because, as hon. Members, and particularly my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) said, we are in the middle of trying to agree a memorandum of understanding with the industry, particularly with the new board, about the registration of at least some racing owners. The problem is not the registration of breeders and trainers. They have been registered all the way through. The question is whether the racing owner—the person who owns a horse or a number of horses or part of a horse for the purposes of racing, or the person with a different type of business but who does some racing as well—can be registered for those activities.
That is what the memorandum of understanding is about. It is still at the draft stage. We have given it to the industry, and the industry first gave us some proposals two or three weeks ago, which involved some changes to the rules of racing. Our memorandum of understanding responds to that and takes the whole matter forward in what I hope hon. Members will think is a positive way.
But there has been too much difficulty, for which we must take responsibility as well as other people. There has been too much argument and bad feeling between the industry and Customs and Excise and ourselves and I do not wish to add to it by going into too much detail on something which is in any case not relevant to the order.
I reassure hon. Members that the intention of the memorandum of understanding is to be as positive as we possibly can be and to seek to solve the problems not solely by the flat rate scheme, but by going as far as we can on the registration point.

Mr. Paice: The House will understand why my right hon. Friend does not wish to go into the detail of the scheme he is trying to agree with the industry, but I wonder whether he will accept the fundamental point that I was trying to make, and have tried to make before, that unless the majority of owners are able to register, under whatever scheme his Department comes up with, it will not have the effect we seek of circumventing the differential in VAT rates.

Sir John Cope: I understand the point which my hon. Friend has made. He has made it before. We want to be as positive as possible and to get as near his position as we possibly can.
My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) asked whether a stud farm is included in the scheme under the definition of stock farming. It includes it.
I do not claim that the flat rate scheme solves the matter. Otherwise we should not be bothering to talk about registration or anything else, but we are taking the discussions with the industry positively forward. This flat rate farmers scheme is a contribution to the problem. For that reason, I commend the orders to the House.

Question put and agreed to.

Resolved,

That the Value Added Tax (Flat-rate Scheme for Farmers) (Designated Activities) Order 1992 (S.I., 1992, No. 3220), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Resolved,

That the Value Added Tax (Flat-rate Scheme for Farmers) (Percentage Addition) Order 1992 (S.I., 1992, No. 3221), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Resolved,

That the Value Added Tax (Input Tax) Order 1992 (S.I., 1992, No. 3222), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Resolved,

That the Value Added Tax (International Services and Transport) Order 1992 (S.I., 1992, No. 3223), dated 16th December 1992, a copy of which was laid before this House on 17th December, be approved.

Orders of the Day — PETITION

Pit Closures

Ms. Ann Coffey: The petition I am about to present contains 13,000 signatures of Stockport people opposing the pit closures programme. Although there are no pits in Stockport, people are outraged by proposals which will result in yet more unemployment. The ever-rising numbers of people who are unemployed, particularly young people who can see no future for themselves, is of great concern to my constituents.
I was asked by people who attended a meeting at Stockport Labour club last Saturday when presenting the petition to ask the Government to tackle the problem of unemployment before it spreads like a cancer and destroys the very lifeblood of our nation.
The petition reads:
Wherefore your petitioners pray that your Honourable House will instruct the Government to reverse the pit closure programme at once, to stop the importation of subsidised coal from abroad, and to put the employment of people before profit to ensure a healthy community where all people can share in the wealth of the nation.

To lie upon the Table.

Orders of the Day — Bosnia-Herzegovina

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.]

Mr. Cyril D. Townsend: I welcome this brief but timely debate on the swiftly flowing events and spiral of violence in Bosnia. The House will look forward to learning from my right hon. Friend the Minister of State the Government's latest estimation of the problems and future plans and, above all, the safety of our 2,400 troops there.
I am not of the school of thought which considers that the western response to the horrendous happenings in the former Yugoslavia has been indifferent and inadequate. Frankly, I am at the other end of the spectrum from the right hon. Member for Yeovil (Mr. Ashdown), who is strong on describing the horrors but weak on telling the country precisely what should be done. We have yet to learn from him how many brigades of British troops at present in Germany should be tipped into the cauldron. I tend to think of the 70 potential flashpoints in the world and the 25 substantial conflicts. I recall and regret the reduction of our British contingent with the United Nations in Cyprus—where we have historical ties and direct responsibilities—in order to make way for further roles.
The conflict in Bosnia has lasted for 10 months, it has claimed 18,000 lives and we are told that 100,000 people are missing. That conflict results from centuries-old ethnic feuds which are bound to continue. Essentially, there is a bitter and bloody civil war which the United Nations can seek to damp down but which in reality it is incapable of controlling. We should concentrate on making sure that the flames do not spread to neighbouring homes—one thinks particularly of Macedonia.
I have sought this debate to raise two specific military matters, which I have brought to the attention of my right hon. Friend beforehand, and I hope that he will concentrate his reply on them. First, there is the danger of blurring a United Nations peacekeeping role with that of a conventional military response. Secondly, there is the possibility of the United Nations calling on the United Kingdom to assume a more direct role in Bosnia which could include separating the warring factions and, no doubt, trying to control their heavy weapons.
I have taken the opportunity presented by no fewer than three Adjournment debates over the years to give the House my views on United Nations peacekeeping operations. Peacekeeping has become an essential part of the work done by the United Nations for international harmony and, above all, security. My right hon. Friend will know that while I fully supported the dispatch of medical personnel, engineers and signallers to the United Nations forces in the former Yugoslavia, I had reservations about the dispatch of the Cheshire Regiment—a fine professional unit with an outstanding commanding officer—and the role that has been allocated to it. After all, the carrying of humanitarian aid is normally left to United Nations agencies and civilian transport. That said, the Cheshires have done a magnificent job. The Times, in an editorial on 26 January with which I largely disagreed, said:

Britain has responded to Bosnia's suffering by sending in troops whose logistical skills and determination have set them in a class of their own.
I certainly share those sentiments.
The Cheshires may have saved the lives of thousands of men, women and children this winter, mainly Muslims, but the risks that they run hour by hour are very great: If, God forbid, 20 of these fine soldiers should be killed by random shelling in the interfactional fighting, or perhaps by mines, it is not hard to imagine the response of the British people. Frankly, they would want them to be withdrawn. The Government know only too well how easy it is to commit troops and how difficult it is subsequently to withdraw them. I should make my own position perfectly clear: at this stage our troops should not be withdrawn, but I expect the moment to come before long if the fighting continues to intensify—and the Cheshires should not be replaced at the end of their six months period of duty.
Following an increase in the number and seriousness of the attacks on our forces, the Secretary of State for Defence announced further deployment on 14 January. He told the House that the additional forces
will be available to provide additional protection to British forces while they are involved in humanitarian operations."—[Official Report, 14 January 1993; Vol. 216, c. 1057.]
The use of the word "while" worries me. The brief from the Conservative research department—having worked there for five years, I know that such briefs should be taken like tablets of stone—said:
The provision of artillery in particular will enable British forces to respond to the kind of attacks faced at Tomislavgrad.
I detect that Ministers have wisely shifted their stance in recent weeks, but I emphasise that our humanitarian relief effort in Bosnia, under United Nations auspices, relies on the support of all parties to the civil war. it would be a disaster to seek to get relief convoys through with artillery and air support. That would change the entire nature of the operation.
I understand that the Secretary General of the United Nations has made known his views on the subject. It is good sense to have the additional forces available to cover a withdrawal of British forces if needed, but it is nonsense to believe that the additional forces could support the relief effort. The House would welcome a clear assurance from the Minister on that. It might become a crucial issue for the Government, and we must know their intentions when the lives of British soldiers are involved.
Secondly, last Wednesday The Daily Telegraph reported:
United States pressure for greater military involvement in Bosnia Hercegovina is developing into a key test of Anglo-American relations in the Clinton era. There is concern in Whitehall that President Clinton will press for a substantial contingent of British ground forces to become involved in separating the warring sides.
The report rings true, and the issue presents real difficulties for the Cabinet. There have indeed been calls from across the pond for Britain to take a European lead in resolving the Balkan crisis, and of course the Conservative side of the House in particular is anxious that Britain should continue to be seen as a reliable ally of the United States. We are aware, too, that pressure for Britain to give up its permanent seat on the United Nations Security Council would be increased by a clear refusal to take a more active role in the former Yugoslavia—but the arguments on the other side are stronger.
I quote from the Foreign Secretary's thoughtful and distinguished speech at Chatham house last week:
We must make it clear that however good the institutions, however robust our decision, it is impossible to guarantee order and good government everywhere … Where we act, our action must be proportionate. For example, to impose and guarantee order in the former Yugoslavia would take huge forces and huge risks over an indefinite period—which no democracy could justify to its people. British troops there have a humanitarian, not an enforcing role".
My right hon. Friend will know of the disquiet on the Conservative Benches, especially among those of his colleagues with knowledge and interest in defence matters, about the lack of clear political and strategic objectives in the former Yugoslavia. Escorting food convoys can be understood, although the risks are understood as well, but a wider role in such a hopelessly confused and complex political situation would not be understood. The difficulties of military action, especially involving armoured vehicles in such a heavily wooded and mountainous country, require little imagination. There are already sizeable armies there, and new and more sophisticated weapons, including missiles, arrive every day. It is a perfect setting for guerrilla activity—a form of fighting at which the Yugoslavs excel.
Colonel Michael Dewar, deputy director of the International Institute for Strategic Studies, has estimated that effective military intervention in Bosnia, including the defeat of the Serb militias and military occupation, would require something like half a million men, and it is almost certain that regular Serbian forces would become involved. Every city, town and village in Bosnia would require a garrison. More important, they would require a garrison for the foreseeable future. There is no clear or possible cut-off date.
My view, and that of many supporters of the Government, is that military intervention is not the answer and should be discounted. It could even be counterproductive and suck other countries into the conflict. For example, Russia might be sucked in on behalf of the Serbs. We would be wise to understand that, however horrific and intolerable the situation there is, when the inhabitants of any country are determined to fight each other and bring about mass rape, starvation, ethnic cleansing, misery and ruin, there are real limits to what can be performed by the United Nations on behalf of us all and of the civilisation that we hold so dear.

Mr. Harold Elletson: I am grateful to my hon. Friend for allowing me the opportunity to participate briefly in this debate, which he will be aware, as I am sure the Minister is aware, is the subject of great concern to many of my hon. Friends and to hon. Members in all parts of the House who share our worry about the dangers of greater British military involvement in Bosnia and in the former Yugoslavia.
I was one of an all-party group which visited Bosnia just before Christmas. With my hon. Friends and hon. Members from the Liberal and Labour parties, I saw something of the complexities of the conflict in Bosnia and visited positions in and around Sarajevo. The problem at present is that the western response to the crisis is being substantially dicated by the emotional attitude of the press and other media in this country and, to a greater degree, in the United States and in Germany. It has largely dictated our response so far. We must be wary of allowing

ourselves to be pushed by the Americans or by the Germans into military intervention in the Bosnian civil war, which could easily escalate into a general Balkan war, with incalculable consequences for this country and for the whole of Europe.
Two issues concern me. The first is the no-fly zone. I am glad that the threat of Britain's being pushed into enforcement of the no-fly zone appears for the moment to have receded; nevertheless, it is still there, and it would be military folly and extremely unwise politically for us to be pushed into any attempt to enforce the no-fly zones in Bosnia Herzegovina.
The other question that we are likely very soon to face because of substantial American pressure, particularly if there is a negotiated settlement as a result of the initiatives of Cyrus Vance and Lord Owen, is United Kingdom participation in a peacekeeping force. Even on that issue, many of my hon. Friends would feel extremely concerned about the United Kingdom putting troops into a peace-keeping force unless there had been a clear settlement, which had been adhered to by all the parties in the conflict for a considerable time.
Will my hon. Friend be extremely careful about giving any commitment of British forces in a peacekeeping role unless it is absolutely clear that there is a workable, negotiated peace settlement which can stick? Otherwise, we shall find that we are embroiling British troops in a Balkan quagmire, with terrible consequences for this country and the whole of Europe.

The Minister of State for the Armed Forces (Mr. Archie Hamilton): I congratulate my hon. Friend the member for Bexleyheath (Mr. Townsend) on securing this debate, and I welcome the opportunity to be able to respond to the points that he has raised. I also appreciate the contribution of my hon. Friend the Member for Blackpool, North (Mr. Elletson), who speaks with much knowledge on the subject.
The House knows that Britain has been at the forefront of international efforts to restore peace in Bosnia and to bring relief to the suffering civilian populations. The first priority in Bosnia and elsewhere in the former Yugoslavia must be a lasting political settlement which respects the legitimate concerns of all the people involved. The international conference on the former Yugoslavia in Geneva, under the chairmanship of Lord Owen and Cyrus Vance, is working hard to resolve each of the different aspects of the crisis. We and our European partners have given those negotiations our active support, both by diplomatic persuasion and by exerting political and ecomomic pressure, notably through United Nations sanctions on Serbia and Montenegro.
We have never had any illusions that the talks would be simple or quick. The issues to be resolved are extraordinarily complex and sensitive, but, as my right hon. Friend the Prime Minister has said, sooner or later there must be a negotiated settlement. The only question is whether it comes now or following further suffering.
For the time being, in spite of the pressures which President Milosevic has apparently exerted—not before time—on the Bosnian Serb leader, neither the Bosnian Serbs nor the Muslims have accepted the comprehensive


proposals which Lord Owen and Mr. Vance have put forward for a peace settlement. The Bosnian Croats alone have done so.
Although all three factions have agreed to the proposed constitutional arrangements, the division of territory on the map presented by the co-chairmen remains a point of contention between the Serbs and Muslims. The co-chairmen have asked the United Nations Security Council to support the proposals and to encourage, and if necessary bring pressure to bear on, the parties to negotiate seriously on the basis of them. We must hope that the talks continue and achieve a successful outcome, as the plan—with whatever refinement is necessary—represents the only real chance for peace.
In the meantime, the position on the ground in Bosnia-Herzegovina is, of course, a matter of serious concern. The military position remains unpredictable, as fighting continues along the Posavina corridor, where the Bosnian Serb army and the Muslims battle to control what is a vital supply route for the Serbs. Fighting has also continued in and around the areas of Bratanac in eastern Bosnia. In central Bosnia, there is continuing tension between the Croats and Muslims, despite the recent signing of a ceasefire.
While we are doing all we can to promote a political settlement, the Government have also had as a high priority the provision of aid to alleviate the appalling suffering which the conflict has caused. I shall speak in a moment about our battalion group. On the civil side, Britain has contributed more than £70 million to date, which includes, for example, a £3 million programme to provide winter shelter in central Bosnia to house up to 20,000 displaced people, £2.75 million-worth of medical supplies, and 60 civilian drivers and support staff, who have now run about 150 convoys carrying over 10,000 tonnes of relief supplies. We are also maintaining heat and power supply for a million people in central Bosnia by ensuring that coal mines and power stations continue to operate.
Turning to the military involvement in humanitarian relief, 4,545 tonnes of aid have been flown into Sarajevo by the RAF Hercules since the humanitarian airlift began last July; and the British infantry battalion group, which has been deployed since November, has now escorted a total of some 15,121 tonnes of aid.
The Government naturally understand and share the concerns of the House about the safety of our infantry battalion group. The battalion is deployed in Bosnia-Herzegovina for a purely humanitarian purpose—helping, as part of the United Nations protection force, to provide protective support for relief convoys operating under the auspices of the United Nations High Commissioner for Refugees. The aim is to proceed by negotiation and with the co-operation of the Yugoslav parties. That picks up the point made by my hon. Friend the Member for Blackpool, North—that it is not our business to take on one side or another in some form of battle. Our troops are not there to take sides in the conflict or to fight the convoys through, against opposition.
As yet, the fighting has not significantly affected the battalion group's task, although it has caused some disruption to the convoys. But the risks to our troops, and

to all involved on the ground, are clear. The tragic killing of Lance Corporal Edwards on 13 January brings them home all too sharply.
I can assure the House that the safety of the British contingent and of others on the ground is kept under continuous review. The Government remain committed to sustaining our participation in the humanitarian effort as long as conditions on the ground permit, but not at unacceptable risk to our people.
It is against that background that, as my right hon. and learned Friend the Secretary of State for Defence informed the House on 14 January, we have deployed to the Adriatic, as a precautionary measure, a carrier group led by HMS Ark Royal, with a number of capabilities embarked, including fixed wing Sea Harrier aircraft and light artillery. The purpose, as my right hon. and learned Friend explained, is to have them available for deployment ashore should the need arise, either to provide additional protection for our personnel or to assist with a withdrawal of United Nations personnel if it were to come to that.
The Government will not allow any blurring of the distinction between a humanitarian effort and the use of force. As my right hon. and learned Friend the Secretary of State for Defence said on 14 January, there is no suggestion on the part of the Government that it would be appropriate or sensible to contemplate a humanitarian operation that could take place only through the use of force. What we have in mind is that there may be occasions when the availability of additional protection will enable individual convoys to proceed safely. But if it became clear that the convoys could proceed only with the constant use of force, that would be totally incompatible with the purposes of the United Nations task in Bosnia.
The Government remain clear that military intervention does not offer a solution to the problems of Bosnia. It would make an already serious situation worse and would compromise the humanitarian relief operations on which hundreds of thousands of lives now depend. Massive military intervention might suppress the conflict for a time but, in the absence of a negotiated settlement, the withdrawal of the intervening force would be the signal for a resumption of fighting. I can assure the House that the Government have no intention of being drawn into a peacemaking role of that kind.
We of course recognise that there will be a role for peacekeeping forces in Bosnia as and when the international conference in Geneva has achieved a negotiated settlement, to help the settlement stick, on the basis of a ceasefire and the co-operation of the parties. There is no reason, however, at this stage to think of changing the role of United Kingdom forces, as the likelihood is that they will be required for some time. Further contributions will therefore be mainly a matter for others.
I can assure the House that the Government are in no danger of losing sight of the distinction between a humanitarian and an interventionist role in Bosnia. The Government will continue to play their part in helping the international community to work with the parties to try to find peaceful solutions to the political problems that are the root cause of the fighting.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Two o'clock.